The lack of diversity in the commercial real estate industry has been under increased scrutiny for the past few years. Some of the largest companies in global real estate made it a priority, such as Blackstone appointing a global head of diversity, equity and inclusion (DEI) in June 2021 and CBRE hiring a chief responsibility officer in 2020. Cushman & Wakefield named its first chief DEI officer in December 2020, and JLL expanded its internal team dedicated to DEI initiatives.
Inclusion initiatives focused on sourcing and fostering diverse talent are widely recognized, but they are only part of the equation. Another component involves supplier diversity and inclusion programs that leverage corporate purchasing power.
In a 2011 survey conducted by the Institute for Supply Management and JAGGAER, just 35% of North American respondents indicated that they had a supplier diversity program in place. By 2021, that figure increased to just under 60% according to a similar 2021 JAGGAER and Tealbook report. Additionally, about 61% of North American respondents in the 2021 report said they are actively pursuing a more diverse supplier base and supplier diversity program within the next two years.
As defined by a 2020 Harvard Business Review study on the topic, a diverse supplier is “a business that is at least 51% owned and operated by an individual or a group that is part of a traditionally underrepresented or underserved group.” This includes minority-owned, woman-owned, LGBTQ-owned and veteran-owned businesses, as well as proprietors who are differently abled. Common classifications include small-business enterprises (SBEs), minority-owned enterprises (MBEs) and woman-owned enterprises (WBEs).
The benefits of supplier diversity go beyond ethical responsibility. Inclusive procurement provides more sourcing options, promoting competitive pricing and creating more resilience and agility within the supply chain. In addition, according to a 2021 study by the Institute for Supply Management, more than 70% of participants with an annual revenue of $25 billion or more report supplier diversity brought innovation to their companies. Another vital benefit is improved brand perception, as diversity efforts are increasingly significant to clients and customers of all demographics.
The recent global momentum toward supplier diversity has been equally reflected in the commercial real estate industry. In October 2020, CBRE pledged to spend $1 billion with diverse suppliers in 2021 and grow this amount to $3 billion within five years. Prior to this initiative, only 4% of its suppliers were considered diverse. CBRE, Walmart, Verizon, IBM and 27 other companies joined together to form the Billion Dollar Roundtable (BDR), pledging to spend at least $1 billion annually with diverse suppliers.
Similarly, Cushman & Wakefield spent more than $536 million with diverse suppliers in North America in 2021 and has continued to bolster its supplier diversity program. In a 2022 Commercial Property Executive article, Nadine Augusta, Cushman & Wakefield’s chief DEI officer, urged others in the CRE industry to “look creatively at how diversity, equity and inclusion can be applied to each area of their business.”
Perhaps even more impactful to the commercial real estate industry is the upsurge of Fortune 500 companies, such as the BDR members, using real estate service companies as a place to increase their diversity spend. To date, the reach of these companies’ supplier diversity programs has been minimal to diverse suppliers in the commercial real estate space. In part, these programs have historically overlooked the professional services category, such as real estate brokerage. However, more large corporations are suggesting and sometimes requiring diversity participation in their real estate spends, such as with large-scale commercial real estate brokerage mandates.
One challenge is that it can be cumbersome to find and vet diverse real estate service providers, particularly for projects with multimarket requirements. In the 2021 JAGGAER and Tealbook study on supplier diversity, close to 45% of North American participants considered “difficulty identifying diverse suppliers that meet procurement criteria” as their organization’s biggest challenge in increasing their spend with diverse suppliers, proving that this issue exists across the board.
Nancy Glick, chief operating officer of Newmark Associates, the longest-running women-owned-and-operated commercial real estate firm in New Jersey, and cofounder and chief executive officer of CRESDA (Commercial Real Estate Supplier Diversity Alliance), has dedicated more than 10 years to building Newmark Associates’ supplier diversity program and advancing diversity in the commercial real estate industry.
“As a certified woman-owned commercial real estate services provider and a former committee member for WBENC (Women’s Business Enterprise National Council), I have witnessed firsthand the challenges faced by diverse companies interested in working with Fortune 100 companies,” she said. “While these initiatives and mandates have been at the forefront of corporate awareness for some time, it is only in recent years that we are seeing a shift to include professional services, and even then, these intentions are not always translated into action. The greatest obstacle for Fortune 100 companies is sourcing and vetting qualified and certified diverse firms, particularly for mandates requiring multimarket participation.”
CRESDA aims to tackle this issue with a business model that simplifies the process of sourcing diverse real estate providers on a national scale.
“CRESDA was born out of the desire to share our experience in the DEI arena with CRE brokerage firms across the country to assist them in gaining visibility and access to Fortune 100 companies,” said Glick.
CRESDA has garnered a large member base of certified woman-, minority- or veteran-owned commercial real estate firms across the country to partner on cross-market initiatives. All members are vetted for capability and guaranteed certified diverse, with principal oversight on every transaction.
“We hope through this business model we can enact real change,” Glick said.
CRESDA member firm Granite Commercial Real Estate, LLC (GCRE), a woman- and minority-owned commercial real estate firm based in New Hampshire and Massachusetts, provides commercial real estate brokerage and advisory services for large corporations.
“Often times, these companies have national footprints and state that it’s difficult to find other woman- and minority-owned commercial real estate firms,” said GRCE President Megan Prieto Giokas. “CRESDA created a solution to overcome that obstacle. It offers large corporations and organizations a national network of vetted and experienced diverse commercial real estate professionals. It also provides a national platform for its members to leverage and provide additional services to existing clients.”
Jenna Glick is the COO and head of business development for CRESDA.