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Source : Contractor News
March 21, 2023
Author : Alex Bustillos
One survey of over 170 North American commercial real estate firms found that 65% were owned by white Americans, while only 7% were owned by Black Americans.
At Contactor News, we have previously reported how black businesses faced especially difficult times during the Covid 19 pandemic. While many small businesses faced a crunch over recent years, black-owned enterprises were especially susceptible to going under.
Ken McIntyre, CEO of the Real Estate Executive Council, explains how for the first time a few multi-billion dollar development projects are now being managed by Black owned development and construction firms. New York City's projected 90-story Affirmation tower is one of them. Upon completion, it will be the tallest building in NYC.
It is envisioned as a home for some of the nation's best Black-owned enterprises and is set on a 1.2-acre tract on Manhattan's far West Side, across the street from the Jacob K Javits convention center. Don Peebles, a Florida and New York-based businessman widely regarded as the country's most outstanding African American property developer, is in charge of the project. For its design, he is working with Anglo-Ghanaian architect David Adjaye and the McKissack Group, a century-old Black- and woman-owned construction management organization.
Peebles says, "New York is a city filled with monumental towers, but not one of them is designed by a Black architect with a Black development team and a Black builder." It is his way of addressing the inequities. The US real estate industry of $20tn almost lacks African American participation. Numerous factors create barriers for developers of color, including access to capital.
The construction industry is a capital-intensive one. The historic lack of cash among African Americans has ramifications at every level of the Black real estate market.
Nevertheless, with proper financial access being more of an exception than the rule for Black entrepreneurs, gaining early-stage financing for even the smallest Black-led businesses can feel similarly significant.
According to Curtis Doucette, CEO of New Orleans-based Iris Development, the intersections of race and economics are felt throughout the firm's lifetime. Whereas other independent developers may be able to raise initial funds from extended family networks, people of color may be unable to do so.
Once finance is secured, discriminatory race-based appraisal procedures can undervalue completed developments, making it more difficult for builders to acquire funding for future projects.
Large financial institutions and specialized, equity-focused organizations have created investment programs that specifically target Black developers. Citibank, for example, has pledged $200 million to assist affordable housing initiatives managed (or primarily driven) by minority developers as part of its much bigger billion-dollar Action for Racial Equality effort.
Enterprise Community Partners also runs a $3.5 billion program to assist developers of color focused on affordable housing. Capital Impact Partners (CIP) announced a $20 million fund in 2021 to support developers of color in Washington, DC.
According to Enterprise Community Partners, despite having a handful of high-profile black-led projects, only 2% of US real estate firms are run by African Americans. It includes the $3.8bn lakefront Chicago development and Philadelphia's Navy yard of a 109-acre redevelopment scheme.
New York City Comptroller Scott Stringer said in a statement, "Minority and Women-Owned businesses are essential to our economy, generate strong local community wealth, are at the core of our city's cultural identity and they are bearing the brunt of our economic crisis."
In another state, for example, Blair Freeman, run by Maranda Adams and Ashley Kuhn, is the only class A contractor in Nebraska run by black women. The firm serves low-income neighborhoods.
Ultimately, across the country, public-private partnerships are key for helping historically marginalized communities expand their role in industries such as contraction and real estate development.