Less than 3% of new commercial real estate development is led by people of color in the U.S. There are many factors that contribute to glaring disparity, including historical and systemic barriers to access for underrepresented developers. In response to these statistics, Baker Tilly, a tax and assurance firm based in Chicago, Ill. with offices in Madison and Milwaukee, Wis., is seeking to foster equity and increase the number of underrepresented commercial real estate developers through their DevelUP initiative.
Through areas like education, resources and relationships, DevelUP is designed to help Black-owned development firms tackle the complexities of affordable housing, grow their businesses and build diversity in the industry.
DevelUP program director Matthew Paschall says the 2020 killing of George Floyd by Minneapolis police was a main catalyst that sparked the conversations about increasing equity for historically marginalized people within the field. The conversations would eventually became the program with the three main focuses — access to capital, access to social capital and access to affordable housing subject expertise.
"We recognize consistently that these are the issues that our developers are having and so if we can reach into our Baker Tilly Rolodex and really be the convener and connector ... to help our clients gain access to the resources that they need," Paschall says. "It's really about leaving communities and our clients better than we found them."
Don Bernards, who is Baker Tilly’s partner in charge of affordable housing and transactions practice, notes they are working both internally and with other stakeholders to try and address programs that are over 20 years old and have extremely limiting underwriting policies and procedures.
"If you don't meet these boxes, quite frankly you need capital," he explains. "You need a $1 million of cash in the bank, you need $5 million of overall net worth. If you don't have, it's a large, large barrier to entry."
Paschall believes that the program is bringing to light a viable field that many people from underrepresented groups would likely consider. He says it starts by increasing the talent pipeline starting in high school, to more undergraduate real estate programs and also by simply seeing more developers from the communities they are building in.
"Not many people from underrepresented backgrounds understand exactly what commercial real estate is," says Paschall. "Understand the depth — that it’s not just selling houses, or single-family home or selling buildings, but that you can build communities and you can impact a variety of outcomes."
For Anthony Kazee, principal at KG Development, he says he was never exposed to the field as a career possibility. He went to college for construction and engineering and was first exposed to commercial real estate when he learned about the Associates in Commercial Real Estate (ACRE) program — an industry-supported initiative that recruits and retains people of color for careers in commercial real estate.
"Once I got into ACRE, it was like a light just went off in my head. Like, 'Wow, I can actually become a real estate developer,'" he says. However, Kazee says it's what comes after ACRE that helped him get his footing in the industry. He says partnering with Baker Tilly through DevelUP helped in networking; learning legalities and meeting equity partners, debt providers and potential project partners.
Kazee is currently working on three projects, one of which involves historical tax credits that he is getting help navigating. "For me it's been everything... what they're doing is really changing the game," he says.
Though Baker Tilly is based in Chicago and has national locations, the program chose Wisconsin and Milwaukee as a focus because of the opportunity to make in impact in an area with room for development.
Paschall explains, "I think that was one of the reasons that we wanted to host the first annual DevelUP affordable housing event. It had to be in Milwaukee, right, because we understood that Milwaukee was a home market for us, but that it was also this beacon of underrepresented developer talent as a product of the ACRE program, as a product of the formal investment into kind of developing this pipeline of talent in the state of Wisconsin."
Bernards also notes the Milwaukee is a prime location of focus for the project because of some of the success that the area has already had in becoming more diverse over the last 10 years in things like community development, economic development work and commercial real estate.
For those closest to it, the program and the impact that its having on the area is a significant reason to be encouraged.
Paschall admits that sometimes it's easy to operate in a vacuum in any industry where you don't appreciate or understand all of the transformative work that's happening. "And so to walk into a room of a 125-plus commercial real estate professionals and have 80% of the room be people of color was very powerful," he says.
"... It was also people looking around and saying, 'I've never seen a room like this before. I lived in Milwaukee my whole life and I've never seen a room like this before,' from people that were focused on real estate.' It kind of helped us understand the power of what we're doing," Paschall adds.
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