CREFC’s Pendergast: Waves of change in commercial real estate

Diversity, equity and inclusion have become paramount initiatives for the commercial real estate finance industry, with sweeping changes being driven in part by trade associations and their members, says CREFC's executive director.

As a complement to Real Estate Capital USA’s inaugural DE&I State of the Market Survey, conducted in collaboration with New York-based trade association Commercial Real Estate Finance Council, REC USA sat down with CREFC executive director Lisa Pendergast to talk about findings from the first-of-its-kind survey and where further progress still can be made.

How have you broadly seen momentum toward DE&I evolve in the commercial real industry over the years?

Lisa Pendergast

When I first started, there were very few women, for example, on a trading floor, and those that were generally were the sales or the trading assistants. Very few of them were bond traders or senior members in investment banking. That has changed significantly over the decades. It has proven true [that over] those decades, [there are] more women doing higher-level, important work.

How has that momentum translated to the state of DE&I today?

I can say I see far more women today and it is amazing, and it is impressive. But what you do not see is that next level of diversity: people of color, people of different origins. This study shows we are seeing momentum toward making this sector of the business world far more diverse, equitable, and inclusive. I think CREFC would like to think that, although we are not a core component of the movement, we have certainly helped.

In the current market environment, how have you seen improvements in DE&I lead to better business results for commercial real estate companies?

Putting like-minded people in a room to solve a problem very rarely comes out with a brand-new solution. Commercial real estate finance has always been a little bit of a puzzle and you need to learn how to work the puzzle and get the result that puts it all together. That only happens when you have individuals who take a different view of the same thing, and you think outside the box. When you bring somebody in with a fresh perspective, it changes the equation for the better in almost all cases.

In line with that, how have you seen appetite for, and participation in, DE&I initiatives grow within CREFC’s scope and membership?

During the early quarters of covid-19 with everyone working from home, I feel it gave folks an opportunity to think inwardly. At that time, we had already launched the DE&I Committee, a Pride Network, and the Women’s Network has been around for quite some time. What was truly exciting was the heightened level of participation and energy those three efforts ushered in; it was really heartening and uplifting, and it came about during the depths of covid lockdowns.

The energy around working toward a more diverse environment has carried through to today – our conferences are more diverse than ever before – among our panels and conference goers alike. I have been here now for even years, and that improvement is tangible and uplifting.

What would you say is fueling the appetite and participation from CREFC’s standpoint?

A lot of it has to do with our partnership with New York University’s Schack Institute of Real Estate. We provided them with a modest endowment a few years ago. That endowment, in part, provided student scholarships, mostly with a diversity focus, though it is not exclusive. The goal was not only to partner with a renowned university and real estate program, but to use that partnership to shed a light on our ability to change the narrative of diversity in our industry. The core goal is to energize our 400-plus member companies to do the same – and they are.

Though CREFC may not be the blueprint, it has seemingly offered a template. How have you seen firms and institutions bolster their DE&I initiatives further – either as a result of CREFC’s work or generally?

Certainly, we can’t take credit for their efforts. We are simply part of an ecosystem that wants to do better – it’s not only the right thing to do, but it’s the smart thing to do. Diversity brings different views and perspectives to any effort and ultimately enhances the outcome. I think you’re seeing progress across CREFC’s member companies, from the money-center banks, to the life companies, to structured finance, and those who service our loans. So many have done a very good job of instituting DE&I policies within their companies.

How are you seeing younger professionals take up and elevate DE&I initiatives for the future?

It is heartening how much the younger generation is focused on DE&I and equality overall. They are the ones who will move this business forward and pay more attention than ever in developing diversified workforces that not only prove successful in business but also enrich the lives of their workers. It’s important to all of us at CREFC that we build a bench of professionals that will run with it and pay it forward.

And I would argue, when that happens, you will see things move much faster than they already have. They’re accelerating. You can see it every year and that’s important. [That’s] progress, but I think there is still much to do, and I look forward to being around to watch it happen.