The lack of representation begins with lack of capital, as Black and Latino people hoping to break into real estate development often can’t even access the seed money to get started.
Out of roughly 112,000 real estate development companies in the United States, about 111,000 of them are white owned. Those numbers are bad, but at the top of the market, they’re even worse: .
A racial wealth gap means that many aspiring Black and Latino developers don’t have such investment-savvy friends and family with discretionary dollars: The median net worth for white families is $188,200, compared with $24,100 for Black families, and $36,200 for Latino families. Nearly three-quarters of white families own a home, but fewer than half of Black and Latino families do.
Don Peebles, 63, another top developer with decades of experience, whose Peebles Corp. is codeveloping Angels Landing with MacFarlane Partners, points to stark numbers. “There is $82 trillion currently invested in venture capital and private equity,” he said. “Of that $82 trillion, less than 1.3% of that money is invested in firms run, owned or founded by women and people of color combined. So that means 98.7% of all venture capital and private equity goes to white men.
But Howard Wial, one of the report’s authors, said the success of some Black and Latino developers could also reflect the unfairness of an industry that sets a higher bar for the developers of color to even compete. Given Black and Latino developers’ barriers to access capital, “they may need to work harder to get that access,” he said.
Oscar Sol, 44, co-founder of Green Mills Group, a Florida-focused development company, which built the $18 million 119-unit Forest Ridge community in Hernando, Florida, said that it took him a decade working for a large developer to master the “unique financing tool for affordable housing.” Low-cost airline launching nonstop service from SF to London Three flights will be flown between the two airports per week this summer
Derrick Tillman, 42, grew up in Pittsburgh in Section 8 housing that he described as “substandard.” He recalls his mother and younger brothers being displaced when a new owner came in and doubled the rent. And the same thing happened to him in his first apartment. When Zabala decided to buy the property, he had trouble getting a loan to purchase and rehab it. Pedro Peguero, 61, of Long Island, New York, the then-owner who had bought the property as an investment in 2005, took a “leap of faith” with Zabala and helped him to finance the purchase, using creative financing, taking out a loan himself for the balance that Zabala’s lenders wouldn’t cover, and having Zabala pay him.
As an immediate next step to address the gaps in developer representation, the report’s authors built a directory that provides an easy way to find Black- and Latino-owned development companies around the country. It also offers a map feature that shows how different parts of the country compare in their developer representation.
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