Diversity initiatives support several strategic objectives for both the commercial real estate industry and individual firms. For example, a more diverse workforce can help firms access new markets, identify new business opportunities and close more deals. A study on diversity and innovation published by the Harvard Business Review in 2013 found that companies with high levels of diversity are 45% more likely to report annual growth in market share and 70% more likely to report having captured a new market. Additionally, a team member who is the same ethnicity as a client is 152% more likely to understand them.
Expanding the talent pool is also an important concern as a significant portion of the real estate workforce approaches retirement. According to the U.S. Bureau of Labor Statistics, the median age of workers in the real estate industry was 48.8 in 2020, six years older than the median for all workers (42.5).
Efforts to increase diversity often focus on attracting students to careers in real estate. In a positive sign for the future of the real estate workforce, the number of students graduating with a bachelor’s or master’s degree in real estate has been growing rapidly in the U.S. According to the National Center for Education Statistics (NCES), from the 2015-2016 academic year to 2019-2020, the number of students receiving a bachelor’s degree in real estate or real estate development has grown at an annualized rate of 13%, to 1,785 degrees. Over the same period, the number of students receiving a master’s degree in these fields grew at a more modest annual pace of 3.5% (to 1,396 degrees), but still faster than the average for all master’s degree programs (1.2%).
The increase in the number of students receiving degrees in real estate reflects the growing number of students who see these specialized programs as a path into the industry or a way to acquire advanced skillsets to advance their careers. Growing enrollments also suggest that real estate firms can increasingly turn to these programs as an important source of talent. For these reasons, increasing the diversity of undergraduate and graduate real estate programs can be a particularly effective way to increase the diversity of the commercial real estate industry.
Although the number of students graduating with a bachelor’s or master’s degree in real estate has been climbing, NCES data indicate that real estate programs are less racially and ethnically diverse than the average for all academic programs (Table 1). In 2019-2020, real estate programs graduated a slightly lower percentage of Hispanic/Latino students and just over half the percentage of Black/African American and Asian American students as the average for bachelor’s programs in all academic fields. However, graduation data reveal that bachelor’s degree programs in real estate have grown somewhat more diverse since the 2015-2016 academic year.
A 2016 report on diversity in higher education by the U.S. Department of Education found that students of color face unequal opportunities to access and complete an undergraduate degree due to factors such as unequal access to quality high-school education and inadequate resources to pay for college. However, this does not explain why undergraduate real estate programs are less diverse than others. Notably, other undergraduate business programs are more racially and ethnically diverse: White students accounted for 58.9% of bachelor’s degree recipients across all business fields (including real estate) in the 2018-2019 academic year vs. 73.3% of real estate degree recipients in 2019-2020. The apparent difference in diversity between real estate programs and programs in other business fields suggests that students of color may be less aware of these programs or less likely to consider a career in real estate.
By contrast, master’s degree programs in real estate have comparable levels of racial/ethnic diversity as programs in other fields, though they have graduated proportionally fewer African American students. The representation of different racial/ethnic groups within graduate real estate programs has not shifted much during the past five years, though there has been a slight increase in the percentage of Latino students.
Many initiatives to increase the diversity of the commercial real estate industry have focused on expanding the recruitment of women and creating more opportunities for their career advancement. However, NCES data on gender diversity reveal that women remain significantly underrepresented in both bachelor’s and master’s degree programs in real estate. Women made up only 29% of real estate bachelor’s degree recipients and 28.2% of real estate master’s degree recipients in the 2019-2020 academic year, roughly half the percentage of women who received degrees at each level across all academic fields (Table 2).
In contrast with the increasing racial/ethnic diversity of bachelor’s degree programs in real estate, women’s representation in these programs has remained nearly unchanged since the 2015-2016 academic year. Growth in the total number of degrees awarded in real estate and real estate development means that a larger number of women did receive degrees in these fields, but they remain outnumbered by male graduates. Women’s representation in real estate programs is substantially lower than in other business programs: across all business fields, women made up 46.7% of bachelor’s degree recipients and 48.5% of master’s degree recipients in the 2018-2019 academic year.
NAIOP Distinguished Fellow Mirle Rabinowitz-Bussell, Ph.D., is director of undergraduate studies in the Department of Urban Studies and Planning at University of California San Diego, which since 2018 has offered a B.S. in Real Estate and Development (RED). The program is significantly more racially and ethnically diverse than most other bachelor’s degree programs in real estate or real estate development in the U.S.: 53.3% of RED graduates in the 2019-2020 academic year identified as Asian American or Hispanic/Latino.
Some of the RED program’s diversity is attributable to the broader diversity of the undergraduate student body at UC San Diego, but the program has also maintained an explicit focus on recruiting diverse students. Rabinowitz-Bussell observes that the RED program contributes to the diversity of the real estate industry while also providing an opportunity for students from diverse backgrounds to obtain a degree that will prepare them for successful careers.
“When we were doing the research to develop the major, we came across anecdotal evidence indicating that many high-achieving minority students come to UC San Diego to pursue a degree in the STEM fields,” she said. “When, for a variety of reasons, they change their major, they are eager to find an alternative degree track that will provide them with the technical competencies found in a B.S. degree and a clear professional development trajectory.”
The program’s curriculum incorporates diversity, equity and inclusion by requiring courses on the history of cities and land use planning that address topics such as redlining, mortgage discrimination and gentrification. The Department of Urban Studies and Planning has invited younger women and people of color to join the RED program’s advisory board, and the department has a long-term goal to increase the diversity of its faculty.
NAIOP Raleigh Durham is working with the North Carolina Central University (NCCU) School of Business to increase diversity in the real estate industry by supporting NCCU’s new MBA concentration in real estate. The concentration, which launched this fall, is the first of its kind to be offered by a historically black college or university. NAIOP Raleigh Durham and NAIOP Corporate will provide at least $175,000 to help fund the program and will support the concentration through a formal partnership with the School of Business.
According to the School of Business’s dean, Anthony Nelson, Ph.D., the idea for the concentration began when a developer interested in increasing diversity in the local real estate industry asked him to help raise awareness among business students about careers in real estate. Nelson suggested that the developer could have a more significant impact on diversity by partnering with NCCU on a new graduate program in real estate. A series of conversations with local developers began that ultimately culminated in plans to launch a new MBA concentration in real estate. Emil Malizia, Ph.D., a research professor at the University of North Carolina at Chapel Hill’s Department of City and Regional Planning, worked with NCCU to develop a curriculum for the new concentration and introduced Nelson to additional developers in the area. Developer enthusiasm for the new program helped the funding and curriculum for the program come together quickly.
“The relationships that we ended up building in the real estate industry were just beyond my expectations,” Nelson said.
Tom Fritsch, senior managing director at CBRE-Raleigh and a NAIOP Raleigh Durham board member, has played an active role in the chapter’s support for the new concentration. According to Fritsch, the chapter had recently formed a diversity and inclusion committee and was exploring new initiatives when members learned about plans for the new program at NCCU. After conversations with Nelson and Malizia, they realized that a partnership with NCCU would allow them to do more to promote diversity than other initiatives the diversity and inclusion committee might consider.
According to Fritsch, supporting the program was an easy decision.
“How do we really make an impact, at the end of the day, to connect commercial real estate in our market with more diversity and inclusion? And so, it just seemed like the right thing to do,” he said.
According to Nelson, NAIOP Raleigh Durham is an important industry partner for the new concentration.
“We’re very appreciative of that relationship through Tom and NAIOP Raleigh Durham executive director Jessica Freeman, who stepped up and really expressed their excitement about the program.”
Fritsch will represent NAIOP Raleigh Durham on the new program’s advisory board. The chapter will participate in mentorship and internship programs and provide input on updates to the curriculum.
Fritsch said that although he sits on the advisory board, “I don’t pretend it’s about me. You have all this knowledge at NAIOP and all the companies that support the members, and to just be a conduit for that is pretty cool.”
Although the program just launched, several new MBA students have already expressed interest in the concentration. Nelson expects to eventually enroll 20 students in the program and graduate about 15-20 per year.
On June 30, the School of Business broke ground on a new building that will house a real estate center affiliated with the new MBA concentration. The center will focus on forging and maintaining relationships with real estate developers and associations, including NAIOP. Nelson sees these relationships as key to fulfilling the new concentration’s objectives.
“We plan to make sure that the program remains viable and relevant and helps to diversify the real estate industry,” he said. “We do a good job of attracting African Americans to the university. We do a great job of preparing them, and we’ll do an even better job of placing them in the real estate industry, given the partnerships that we’ve forged.”
NAIOP and other commercial real estate organizations have sponsored a range of initiatives to promote diversity in undergraduate and graduate programs. Most initiatives either seek to attract women and people of color to the commercial real estate industry and related academic programs or provide those already enrolled in a program with additional support.
NAIOP is a founding sponsor of the Real Estate Exchange (REEX), which partners with universities to offer summer immersion programs for high school students of color. These programs expose students to careers in commercial real estate, provide them with information about undergraduate real estate programs and help prepare them for college. Students learn about business and commercial real estate fundamentals, participate in case studies and receive coaching from local commercial real estate professionals.
In addition to its sponsorship of REEX, NAIOP also offers four Diversity Student Scholarships to graduate students enrolled in programs at member universities to support them in their studies. Individual NAIOP chapters also offer current undergraduate and graduate students opportunities to network with commercial real estate professionals and participate in educational programs such as University Challenge case study competitions. Several NAIOP chapters have also teamed up with colleges to sponsor REEX and other high school summer immersion programs in CRE.
Shawn Moura, Ph.D., is the director of research for NAIOP.