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“Until those they invest in look like those who contribute their money, we’re not going to get there,” said Craig Livingston, managing partner at Exact Capital and chairman of the New York Real Estate Chamber, of pension funds.
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When New Yorkers list what they love most about the city, they often mention its diversity. The city’s status as a melting pot is usually cited as one of its greatest assets.
However, as protests demanding racial justice continue to dominate headlines across the country, New York also must pay attention to what’s happening in our own backyard. The population is diverse, yes, but we have to acknowledge that the playing field is not level for all New Yorkers.
To help illustrate the issue, think of the buildings dotting the city’s storied skyline. Real estate development is one of the most lucrative local industries. But as Brian Pascus reported this week in “Inequitable Equity,” the decisions about who will be given the financing to build often leave minority developers out in the cold.
“These allocators of capital are almost 100% white men,” said real estate developer Don Peebles, who is African American. “They allocate capital to who they know and who they are comfortable with, and they allocate it to the same people over and over again.”
Local real estate development would benefit from a diverse assortment of perspectives. If you grew up in, say, Harlem, you might be more inclined to consider the needs of that area than you would be if you hadn’t. Including more voices in the discussions about what is built where could help ensure that no communities across the boroughs fall into disrepair and lack necessary amenities.
It costs a lot of money to build in New York, where, as Peebles noted, a small deal can take $100 million. Generational wealth is a major source of capital for many developers, but Black Americans have not generally had the opportunity to amass large-scale wealth thanks to institutional racism. Black developers who can put up capital to build often hit roadblocks in acquiring investment funds to carry them across the finish line.
The only way to make New York a city where all neighborhoods flourish is to demolish these roadblocks once and for all. Financial institutions need to weed out the inherent biases and cronyism that keep minority developers on the sidelines. They can start by diversifying their employees and dedicating groups to green-light capital for projects in underserved neighborhoods (as at Goldman Sachs). In addition, pension funds must hire asset managers who reflect the backgrounds of the workforce that contributes to them.
“Until those they invest in look like those who contribute their money, we’re not going to get there,” said Craig Livingston, managing partner at Exact Capital and chairman of the New York Real Estate Chamber, of pension funds.
Roughly 65% of city residents are people of color, according to 2010 statistics from the Furman Center. It’s time for those who control the city’s capital to acknowledge this and give everyone a seat at the table.
