Wall St. And Business Wednesdays: Blacks Attempt To Raise Profile In Real Estate by Dean Starkman
John L. Guillory is a real-estate rarity. He works in commercial real estate, and he is black.
In 1979, the one-time National Football League defensive back was named the first black district manager at a major national commercial real-estate brokerage, Grubb & Ellis Co. He was still the only one when he left in 1991, and none has succeeded him since. He founded a three-person brokerage, Northbridge Group, that seeks leasing work from corporate clients. "We want to win at this game," Mr. Guillory says. "How do I change the rules so I can win?"
Many industries are white, but not like commercial property. Of the industry's 100,000 or so professionals -- leasing brokers, asset managers, real-estate company executives -- handling the $1.5 trillion of commercial real estate in the U.S., fewer than 1% are African-Americans, according to brokers, trade groups and labor economists.
By comparison, blacks make up 7.9% of business executives and managers generally, and about 5% of lawyers and stock and commodity brokers, according to government figures.
There are few if any senior-level blacks among Fed177 publicly traded real-estate investment trusts. And at big national brokerages like CB Richard Ellis, Jones Lang Lasalle, Trammell Crow Co., only one African-American -- at Cushman & Wakefield -- even reports to a chief executive.
Fed up, some black real-estate executives and brokers across the industry have started to push for change. Last year, nine black-owned brokerage and design firms, including Mr. Guillory's, formed Concordis Real Estate LLC, the first national black-owned commercial brokerage.
The Chicago-based joint venture was formed hurriedly after Hewlett-Packard Co. hired Cushman & Wakefield to handle all its U.S. real estate but insisted that Cushman give minority brokers part of the work. Now the company is beginning to win work on its own, including jobs representing Sears Roebuck & Co., Bank One Corp., the city of Houston, Discovery Communications Inc., and part of the Detroit police-and-fire pension fund's $300 million real-estate holdings.
Just Tuesday, Wal-Mart Stores Inc. said it had hired Concordis's Chicago branch to dispose of three leases in Illinois, leaving open the possibility of more work to follow. "This gives us a chance to get to know each other better," said a spokesman for the Bentonville, Ark., retailer.
Concordis is part of a broader stirring in commercial real estate to increase racial integration. In January, a group of 40 black senior executives in the industry formed the Real Estate Executive Council, a Chicago-based nonprofit, to push for more minority hiring and promotion. One minority-recruiting effort, the Real Estate Associates Program, includes three nights' training in proper cocktail-party behavior. (One tip: Put nametags on the right to increase visibility during handshakes.) The program plans to expand from its bases in Washington and Atlanta to other cities.
This summer, CCIM Institute, a Chicago accreditation body for commercial real estate, waived its $845 tuition for minorities to two-day seminars in Gaithersburg, Md., Orlando, Fla., and Houston.
The lack of integration in the industry is a result of years of quiet exclusion. Slavery, redlining and other factors kept blacks from owning much commercial property historically, so there aren't many black real estate moguls to dole out work to their friends, as whites have done. Despite its enormous size, the industry is 85% closely held and hidden from the kinds of social pressures that spur public companies to integrate.
Concordis is the first black-owned, market-driven company that aims to build a network for blacks looking for a way in. It has taken a while, but Mr. Guillory is persistent. The son of a dockworker and a nurse's aide, Mr. Guillory became a talented football player. He won a full scholarship to Stanford University and spent most of four seasons with the Oakland Raiders and Cincinnati Bengals. On his last play in 1971, he was flattened by Colts star Mike Curtis and carried off the field.
Mr. Guillory spent the next 20 years at Grubb & Ellis, rising to become the industry's first black district manager, over Oakland and Walnut Creek in California, supervising about 65 brokers, researchers and assistants. By the mid-1980s, Mr. Guillory was named chairman of the company's executive committee, a sounding board for top management. He was one of the few executives at Grubb to have both an M.B.A. and a law degree, both earned at night school.
But after chafing for years under regional managers he believed to be less productive and less qualified, he left in 1991 when a reorganization stripped him of responsibility for the Walnut Creek office and installed an assistant manager beneath him in Oakland against his wishes.
Gregory M. Sherwood, a spokesman for Grubb, now based in Northbrook, Ill., declines to comment on Mr. Guillory's tenure. He says the company today "is very, very focused on growing our diversity, not only among races but also among females."
After Grubb, Mr. Guillory, now 58 years old, worked as an independent broker with moderate success, and made the key connections that led to Concordis. Among them: Derrick B. Mashore, another former college football star who would become a managing director at Cushman & Wakefield and one of the industry's highest-ranking African-Americans, and Art Schultz, H-P's global real-estate manager for acquisitions and dispositions, who gave Northbridge a series of jobs.
When H-P put the management of its U.S. portfolio out to bid, none of the 14 bidders offered much more than promises about how they would fulfill the stringent minority-participation requirement, says Mr. Schultz, who is white. Cushman beat out the others, he says, in part because Mr. Mashore, with his ties to Mr. Guillory and other independent black brokers, had the best chance to actually "do something."
Soon Messrs. Mashore and Guillory were frantically phoning around the country to find black brokers with enough experience to meet H-P's demanding specifications, especially closing deals on a tight schedule. Among the handful they found: A. Ivan Boone, founder of Chicago's only black-owned firm, who had engineered a giant deal to move Cook County government to a new headquarters; Willard O. Freeman, founder of a Washington firm who was handling work for Discovery Communications; and Chauncey C. Mayfield, a former Boston economic-development official who had also developed industrial parks and residential projects.
Last year, black brokers from around the country -- some of whom had heard of each other but never met -- flew to Cushman's headquarters in New York. Mr. Boone, who heads Chicago's Frontier Commercial LLC, says most were suspicious at first that Cushman intended to use them as "window-dressing." They relented only after Cushman scrapped plans to require each black-owned firm to sign individual deals with Cushman, instead providing seed money for an independent firm that would retain the right to work on its own and with other national brokerages.
Mr. Guillory says Concordis has already given black- and minority-owned brokerages a crack at bigger deals. "It all depends on what arena you want to play in," he says. "I don't want to be known just as that guy working in Oakland."
Dean Starkman is a staff reporter for The Wall St. Journal and can be contacted via e-mail at: firstname.lastname@example.org
Note: This article first appeared in the October 22 edition of The Wall Street Journal
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Wednesday, October 22, 2003
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