The real estate development industry has long been dominated by white-owned companies, with only a small fraction of the 112,000 firms in the United States being Black-owned.
However, Black real estate developers are proving to be just as successful as their white counterparts, and they are also more likely to hire Black owned businesses.
This creates more opportunities for these companies to participate in larger projects and provides economic empowerment for these businesses to reinvest in their communities through scholarships and other empowerment activities.
Despite their success, Black developers still face many constraints, including a representation crisis, a revenue gap for medium-sized Black developers, and revenue cliffs for large Black developers. However, removing these constraints could be an opportunity to increase wealth in Black communities and expand the overall economy by creating many new jobs.
In this article, we interview a group of Black real estate developers to discuss their experiences and perspectives on these issues.
Ericka Keller – Managing Member, Brisa Builders Development.
How has being a Black developer influenced your approach to community engagement and creating economic opportunities for other Black-owned real estate-related businesses?
Being a Black developer is intrinsically tied to my approach to real estate development. From my perspective having a strategic plan regarding the path to economically empowering other Black and brown businesses is a fundamental component of the development process, just as much as having a zoning analysis completed, an environmental study completed, and a budget, which we all know are usually the first steps in developing a project.
Every development has to be viewed through the lens of not only real estate but also through the lens of developing minority-owned businesses because that is the only way to truly close the economic disparity and racial inequality.
One of the first questions that I ask for every project is “What Black or Brown-owned business can I engage for various aspects of this opportunity?” Who is the best fit for this opportunity? I truly believe that it is the responsibility of every Black developer to take this approach to their development projects – to consider every sector of the development process and seek out and research Black businesses for varied opportunities.
Can you talk about projects you’ve worked on where you specifically prioritized hiring Black-owned businesses? What impact did that decision have on the project and the community?
We take this approach seriously for all of our projects, however, I would like to highlight one of our substantial projects, Ebenezer Plaza which is a three-phased project in Brooklyn, New York producing 523 units of deeply affordable housing, 22,000 sq. ft of commercial retail and 40,000 sq feet of community facility in the form of House of Worship.
In this project, we went well beyond the required minority participation as stipulated by the city policies. The General Contractor was particularly deliberate in ensuring that the supervisory personnel on the job site represented the community’s diversity, with the Superintendent Project Manager and Assistant Project Manager being Black. Additionally, we enlisted the services of various Black-owned businesses, including National Standard Abstract, a title insurance company. Moreover, we exceeded the city’s mandate on the minimum amount of contracts required for minority and women-owned businesses by doubling the number.
For one phase of the project, which required $6 million worth of awarded contracts to certified M/WBE firms, we had over $12 million worth of contracts, which still didn’t capture minority and women-owned businesses that were awarded but choose not to certify their status with the city as well the employment opportunities that occurred for black and brown people during the construction period. The reported numbers above also don’t capture the other strategic ways to empower minority and women-owned businesses like our choice to hire an MWBE property manager and minority-owned social service provider.
Kenneth M. Morrison – Managing Member, Lemor Development Group
What role do Black developers play in addressing the housing affordability crisis, and how can the industry as a whole work to create more equitable access to housing?
In the US, affordable housing does not get done without government assistance. Starting with that premise, legislatively; that means that Black developers need to be a part of the legislative process. We should be heard and part of the process when programs are being created/updated and we should also play a significant role when those programs are put in place. Many times Black developers come from the same type of communities they develop in.
They can relate to the communities they develop in. For the community members to see and work with developers who look like them creates an intangible benefit from these interactions. Black developers have the same capacity to deliver competent work and returns to investors just like all developers. The issues begin when Black developers are challenged with smaller, harder to execute deals that get pushed back so municipalities can focus on larger developments. This is a major pain point for Black developers.
Municipalities need to fundamentally change how they prioritize funding of developments. When Black developers have the same access to deal flow, they will grow and can execute larger developments that will help alleviate the affordability crisis. If this issue is addressed, Black developers will have the opportunity to compete in the affordable housing space.
Prioritizing Black developers getting deals done not only grows the capacity of these companies but since the majority of these developments are in areas that need affordable housing, you begin to see higher prioritization of local hiring, reduction of blight, locally based business growth, and Black dollars circulating in the community a little longer.
What advice would you give to other Black developers who are struggling to access capital and secure funding for their projects?
Collaboration and partnerships are the keys to growth in this business. Not only for the capital and funding but when growing capacity; collaborations with experienced developers are a tool for growing capacity. The capital space is slowly beginning to open up to black developers, but it is nowhere as equitable as it should be.
Leaning into capital funders who are doing business with Black developers is a good place to start. It is also important to know what funders are looking for. Your company’s administrative structure needs to be in place with a clear delineation of roles, in particular, how are finances handled. Who is preparing your financial statements etc., are questions funders want to know. Even if you don’t have a CFO or someone on your staff working on your financials, think about using a third-party accounting firm to serve as your company’s CFO.
This is a primary area funders focus on. If you don’t have this in place, funders will not have confidence in funding your organization or project. Also, seek funding from organizations that fund the sector you practice in. You can find lenders, funders, pre-dev financing, and debt specific to your sector. In particular, around affordable and workforce housing, there are funding sources specific to that sector. There are increasingly more dollars available for green development and conversions which can be used in your capital stack.
Chris Bramwell, Jr. – Managing Partner, CB EMMANUEL
How do you navigate the challenges of securing financing for your projects, and what strategies have you found to be most effective in obtaining funding?
- Identify the type of housing you are developing: Understanding the type of housing you are developing can help you figure out what types of financing are available.
- Build strong relationships with funders, syndicators, agencies, and community stakeholders: Developing strong relationships with key players in the industry can help you gain access to financing opportunities.
- Pair different sources of funding to create a financially feasible project: You need to understand the different types of funding sources such as subsidies, grants, equity, and debts, and how to effectively pair them to make your project financially feasible.
- Consider joint ventures: Joint ventures can help you build your knowledge, experience, and balance sheet. It can also allow you to gain access to multiple financing awards.
- Seek guidance from experienced professionals: It is essential to seek guidance from experienced professionals who can help you navigate the complex world of financing and provide you with valuable insights.
- Focus on developing a solid business plan: Having a well-defined business plan that outlines your project’s goals, strategies, and financial projections can increase your chances of securing financing.
Overall, securing financing can be challenging, but by implementing these strategies, you can increase your chances of obtaining the necessary funding to bring your projects to fruition.
Can you share any specific examples of projects you’ve worked on that have had a positive impact on the surrounding community, particularly in terms of economic empowerment?
Our projects have had a positive impact on the surrounding community by empowering the local economy through our commitment to hiring Local Minority Small Businesses, subs, and employees. We prioritize using individuals and companies from the community and this has resulted in a ripple effect of economic growth.
Our projects create jobs, which in turn leads to local employees patronizing small businesses in the community. Additionally, the small businesses we work with are able to donate services or funds to local churches, non-profits, and other community organizations. Overall, our projects have had a significant impact on the economic empowerment of the communities we serve.
As a minority developer, I’ve had the opportunity to empower the communities we serve through the use of local minority small businesses, subs, and employees. For example, I was able to help a union doorman grow his moving and storage business by hiring his company for a project, which eventually led to him quitting his union job to run his business full-time and even partnering with another local entrepreneur to open a restaurant in the community.
Another example involves a small home improvement business that I hired for a project. They did such a great job that I continued to use their services on several other projects. As a token of appreciation, they helped renovate a local church’s sanctuary, transforming it into a state-of-the-art multi-purpose room used for various community events.
Lastly, a father and son duo approached me to use their title company for my projects. Despite my initial skepticism, I gave them a chance and it turned out to be a great success. They have since given back to the community by sponsoring networking events, giving out scholarships to local students, investing in other small businesses, and supporting local sports clubs for kids.
These examples show how giving opportunities to local minority entrepreneurs can help them grow their businesses, create jobs and opportunities, and ultimately give back to the community.
Overall, our projects are not just about creating buildings or infrastructure, but also about creating a sustainable ecosystem that benefits the entire community. This is a great example of how business can be a force for good, and I hope more developers and entrepreneurs.
Osei Rubie – Founder and President of National Standard Abstract
The success story of my company, National Standard Abstract, illustrates how Black developers can play a critical role in empowering Black businesses within the development ecosystem.
These developers have strategically chosen to hire and partner with businesses like ours, resulting in over $2 billion in closed deals for our title insurance firm, and the ability to hire Black employees and invest in local communities through initiatives like scholarships for youth organizations.
This cycle of economic empowerment can be seen in the support provided by National Standard Abstract to local organizations like The Rosedale Jets, HBCU Lincoln University, and elementary school students in Harlem.
Overall, Black developers can be a powerful force in creating a more equitable and thriving ecosystem for Black businesses and communities.