The commercial real estate industry has experienced a fundamental shift in recent years as more women than ever are pursuing career paths within the field that have the potential to lead to a seat in the boardroom.
Through my work as an executive search professional who specializes in the real estate industry, I have watched an increasing number of females rise through the ranks first-hand. All told, more than 35 percent of my placements have been women over the past three years. And last year, 40 percent of my placements were women. These female executives have moved into positions that include CFO, managing director, vice president, national director of research and regional director of finance.
With an increasing number of women earning a place in the executive suite, the REIT community is starting to see an uptick in female faces in the boardroom–a place where they are still markedly underrepresented. The Commercial Real Estate Diversity Report published earlier this year shows that 62 percent of the 175 REITs in the study had at least one woman director at the time of the report's publication, which marks a significant improvement from 45 percent in 2012.
Despite these advances, however, gender balance in the boardroom has yet to become an industry norm. According to the Commercial Real Estate Diversity Report, only 10.2 percent of board seats among the 175 REITs included in the study were held by women. All REITs included in the report were being publicly traded on NASDAQ or the New York Stock Exchange at the time the study was being conducted.
Those female executives who have climbed their way to the top can influence other women in the commercial real estate industry to follow in their path—their achievements show that such career paths are attainable regardless of gender. And they can also have a one-on-one impact by providing encouragement and guidance to the females under their direct supervision. In the case of one woman whom I placed last year in an asset management position, she largely attributes her success in the new job to the supportiveness of her female boss.
The nonprofit organization Catalyst, which focuses on expanding opportunities for women and business, urges companies to take mentoring a step further by instituting formal programs. According to the Making Mentoring Work report published by Catalyst in 2010, “Women often have decreased access to potential mentors, are less successful in finding mentors willing to invest in their career development and/or receive fewer benefits from mentoring relationships than men do. There are many benefits of formal mentoring that can address the lack of naturally occurring informal relationships.”
CREW and the Urban Land Institute (ULI) are two industry organizations that have heeded the call for formal mentoring programs in which women can gain guidance from accomplished executives in their field. In 2011, CREW partnered with commercial real estate services provider Cassidy Turley to develop and launch an executive-level mentoring program known as Bridging the C-Suite Gap. Its aim is to provide mentees with the opportunity to not only further develop their skills, but also to identify strategies to support career growth at the senior level. And ULI created the Women's Leadership Initiative several years ago, which aims to increase the number and visibility of women who serve in leadership positions in the real estate profession. Part of its mission is also to support the development of its young female members as leaders in ULI and in their professions.
Nurturing and advancing female talent is crucial for the success of the commercial real estate industry moving forward, particularly as the graying of the industry continues and new leaders are needed. The aforementioned Commercial Real Estate Diversity Report underscores this, finding 36.1 percent of REIT directors are aged 60 to 69 and nearly 23 percent are aged 70 or older.
In the case of the REIT community, they need only take a look at some of the biggest corporations in the United States to realize why they may want to fill some of those board seats that are soon to open up with deserving female executives. Catalyst studied 524 companies on the Fortune 500 list across a five-year span and found that organizations with three or more women on their boards (for at least four out of the five years) dramatically outperformed those that did not have any female board members. They outperformed by 84 percent on return on sales, 60 percent on return on invested capital and 46 percent on return on equity, according to the findings published in 2011.
Serving as an underutilized resource, there is certainly no shortage of female talent that can figure into succession plans throughout the commercial real estate industry. More women than ever before are stepping into roles that have been traditionally dominated by their male colleagues. It is in the real estate financial sector where I have seen the largest influx of women moving into more prominent positions. For example, females now regularly fill a third of the seats at the capital raising conferences that were once primarily attended by men. And on the job, they are posting the same impressive numbers as their male counterparts.
However, there still is work to be done when it comes to achieving gender parity in the commercial real estate industry. Issues still exist not only in terms of advancement, but also in regard to salary. Though I have never personally witnessed an instance of gender-based disparity in compensation, the statistics are disheartening. The wage gap has narrowed somewhat, but many females are still earning less than their male colleagues in the commercial real estate industry.
Research from the U.S. Bureau of Labor Statistics (BLS) shows that a significant earnings discrepancy still exists across various occupations in the real estate industry. Female property, real estate and community association managers made 78.2 percent of what their male counterparts earned on average in 2012, according to the report published by the BLS.
The wage gap continues to be an issue in the overall American workplace, however, even for those women who hold the highest positions in their fields. Female chief executives, for example, made 76 percent of what men earned in this same occupational category in 2012, according to the BLS.
Separate research from CREW Network that specifically focused on men and women in the commercial real estate sector did find that women at the $250,000 salary level rose slightly from 8 percent in 2005 to 11 percent in 2010. These findings also showed that though the amount of men in this earnings category dropped from 34 percent in 2005 to 31 percent in 2010, there were still nearly three times more men than women represented at the $250,000 compensation level.
The future looks bright for the REIT community and the commercial real estate industry at large, though, as there are women in the top echelon who are truly making an effort to move the needle on issues surrounding gender disparity in the workplace. Females in these high-level positions have the power to profoundly influence company culture precisely because they are so much more visible throughout all parts of the organization. The way that person conducts herself and how she treats her peers and values her associates throughout the company becomes an immediate culture point, so she has the ability to bring about change that is beneficial to all genders at every level of her organization.
Given the overwhelming evidence pointing to the positive implications of greater inclusivity in the commercial real estate industry, it would be wise for us all to be mindful of and to work towards achieving true gender parity. After all, doing so can ensure that the most capable leaders rise to the top, which means a better future for all.
Stephanie Pearson is a partner with Terra Search Partners, an executive search firm that focuses on the real estate industry.