By ICIC | November 16, 2023
In recent years, the commercial real estate industry has grappled with a lack of diversity, particularly for developers of color who face challenges in accessing capital for their projects. The issue of unequal capital access took center stage at the inaugural Developers of Color Summit organized by the New England arm of the Department of Housing and Urban Development. With over 300 industry professionals in attendance, the summit shed light on the pressing hurdles faced by developers of color and initiated discussions on overcoming these challenges.
ICIC’s Research Unveils Disparities
A pivotal report, “Breaking the Glass Bottleneck,” written by ICIC and the nonprofit Grove Impact, revealed alarming statistics—Black and Hispanic developers collectively make up less than 1% of private developers nationwide. This stark underrepresentation highlights a significant disparity in the real estate development landscape.
Black and Hispanic developers collectively make up less than 1% of private developers nationwide.
The Role of ICIC’s Research
ICIC’s research serves as a catalyst for change by bringing attention to the representation crisis in real estate development. The Breaking the Glass Bottleneck report not only quantifies the issue but also emphasizes the crucial role of access to public and private resources for the growth of developers of color.
Strategies for Change
The research underscores the importance of encouraging and supporting a pipeline of emerging developers of color, a sentiment echoed by HUD New England Regional Administrator Juana Matias. Recognizing the need for intervention in policies and processes, Colleen Fonseca, Executive Director of the Builders of Color Coalition, emphasizes that serious changes are essential to address economic inequality in the market.
Success Stories and Challenges
While smaller Black and Latino developers have shown success in generating revenue, they encounter challenges when scaling operations due to limited access to capital. ICIC’s research sheds light on these developers, providing insights into the obstacles they face and the opportunities that can drive positive change.
ICIC’s research has not only unveiled disparities but has also influenced policy and initiatives aimed at fostering diversity in real estate development. The Massachusetts Affordable Housing Emerging Developer Report, compiled by the state’s housing finance agency, identifies key opportunities and challenges faced by developers of color, using survey responses from 300 real estate professionals.
The Way Forward
The state’s commitment to increasing diversity is evident through initiatives like MassHousing’s Equitable Developers Fund—a $50 million initiative supporting developers of color with pre-development costs and providing grants and low- or no-interest loans. Additionally, the Boston Real Estate Inclusion Fund, created by Black Boston developers, exemplifies efforts to close the racial wealth gap and provide opportunities for emerging developers of color.
By uncovering disparities, influencing policies, and inspiring initiatives, ICIC plays a pivotal role in creating a more inclusive and diverse future for the industry.
ICIC’s research has become a driving force for change in the real estate development landscape. By uncovering disparities, influencing policies, and inspiring initiatives, ICIC plays a pivotal role in creating a more inclusive and diverse future for the industry. As developers of color come together to tackle the representation crisis, ICIC’s research stands as a beacon guiding the way toward positive transformation and equitable opportunities in real estate development.
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