15 March 2022/ Guides

How DEI will shape the future of the commercial real estate industry

Over the past few years, the term ‘diversity, equity and inclusion’ (DEI) has become a widely used buzzword in the business world, with countless corporate websites touting their commitment to building diverse teams and inclusive cultures.

But here’s the thing though, concepts of diversity, equity and inclusion are not just empty catchphrases, they’re vital components to building stronger businesses – bringing fresh and innovative ideas into the decision-making process, enabling organisations to better reflect and connect with their customers, and creating a healthier, more inclusive workplace.

So how has the real estate industry fared when it comes to incorporating DEI into the workplace, and how far do we still need to go? Here are some of the ways we predict DEI will impact the commercial real estate industry in 2022 and beyond.

Change is coming

We still have a long way to go before we achieve true equity and inclusion in the workplace. A recent survey from the Bridge Group looking into socio-economic diversity in the real estate sector found that white men still dominate senior roles in the industry, taking up 64% of positions. Real estate firms in the survey also had a smaller number of employees from lower socioeconomic backgrounds compared to other leading finance and accountancy firms.

The good news is that most companies are no longer turning a blind eye to these issues. In fact, Deloitte found that 46% of real estate firms report being focused on increasing diversity in hiring, development and leadership. Elsewhere, over 90 senior industry leaders have signed up to UK campaign group Real Estate Balance’s 10 commitments to diversity. The group is campaigning to address gender imbalance in the industry.

Women in real estate still lack representation

While real estate has taken many steps forward in improving DEI, much more needs to be done to accelerate progress, especially when it comes to the representation of women in the industry. In the UK, only 30% of senior leadership positions in commercial real estate are occupied by women. And the discrepancy in pay between men and women remains far too high. Research by the UK government showed that women in commercial real estate experience a 27% pay gap, almost twice as large as the national average.

Many women in the industry still find it difficult to be recognised for their achievements or find the support and encouragement needed to advance to senior leadership. This situation is even more challenging for women of colour.

The business imperative of DEI

It’s clear that promoting DEI in real estate has many competitive advantages including a broader talent pool as well as fresh ideas and experiences needed to deal with disruption and capitalise on opportunities. According to a report commissioned by PwC, 61% of real estate professionals believe that workforce diversity will have a positive impact on the bottom line of the business.

And while businesses are far more aware of the many advantages of supporting DEI, such as increased productivity and profitability, there are also many other benefits that, though less tangible from a monetary perspective, are just as important, such as better talent retention, improved reputation and employer brand, as well as healthier, more engaged employees. By including a wider range of people involved in decisions that impact community needs, it’s clear that improving DEI in real estate will also have a positive impact on communities in which we live and serve.

While many companies promote diversity on their company websites and in their marketing efforts, fewer are as intentional in following through with the necessary interventions needed for real change. It’s our prediction though that as companies come under increasing pressure to prioritise environmental, social and governance (ESG) issues – which includes DEI as a key tenet – how the commercial real estate industry proceeds could lay the foundations for its success over the next several years.