A major investment in one of the newer trends in real estate development -- combining science-based office space with residential and retail -- in one of America's founding cities is also addressing the old issue of diversity, equity, and inclusion (DEI).
And some of America's wealthiest athletes are aboard. The Wall Street Journal reports [subscription required] that four NBA All-Stars are among a group of about Black and Latino professionals putting about $30 million into a roughly $1 billion project in Boston.
Jrue Holiday of the Milwaukee Bucks, Andre Drummond of the Los Angeles Lakers, Kyle Lowry of the Toronto Raptors, and Andre Iguodala of the Miami Heat are among the group of 150 investors that also includes real estate professionals, doctors, lawyers, and tech workers, the Journal says.
Committed to selling 5% to Black and Latino investors
New York-based Tishman Speyer is seeking city and state approval for the 900,000-square-foot first phase of the project it has leased for 95 years from Harvard University's Allston Land Company, the Journal says.
Included in that phase would be lab space, offices, retail, apartments, and a hotel. Boston, with its world-class university community, is one of the original hot spots for life science real estate development.
The property sits on 36 acres in the Allston neighborhood near Harvard Business School. The university created the land company in 2018 to guide its development, the Journal says, and Tishman Speyer was asked to commit to selling 5% of it to Black and Latino investors.
Expanding the network for access to good deals
Penny Pritzker, former U.S. Secretary of Commerce and a board member of the Harvard Allston Land Company, told the Journal: "There's a massive disparity in wealth creation in communities of color compared to white communities. And so, why is that? Well maybe it's access to good deals."
The investors are all accredited, meaning they have a net worth of more than $1 million or annual income of more than $200,000, not counting their primary residence.
But it's not money that creates the barrier for investment by people of color. It's networking. The developer's president and CEO, Rob Speyer, accomplished that by working with James Simmons III, CEO of New York-based Asland Capital Partners and Rudy Cline-Thomas, the founder of investment firm Mastry who brought in the NBA players and four NFL players, the Journal says.
"There is a reason why it is defined as 'friends and family,'" Simmons told the Journal. He also said that Black people generally don't get invited to invest in as many private real-estate deals as white people of similar means.
The Millionacres bottom line
The Journal says that private entities rarely set such quotas for such investment. Tishman Speyer -- which also is active in the SPAC arena -- did in this case to overcome the natural tendency for people to invest together with people they already know and do business with.
But DEI isn't just about wealthy athletes (and their immediate network) capitalizing on their name, fame, and, well, capital. The surging corporate emphasis on DEI is addressing a broad-based issue of economic disparity often experienced by people of color in America.
That same dynamic may be reflected in the recent experience of an Indianapolis homeowner who saw the appraised value of her house double when she had a white friend stand in as the owner. And redlining has been a well-documented issue in the residential real estate business for a long time.
Addressing these doesn't just create opportunity for those parts of the whole. A rising tide lifts all boats -- even if we each want to stay in our own.