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Economist Sam Chandan Discusses Diversity in CRE, Current Investment Climate

“I have a whole subset of students who experience anxiety around whether they can be themselves when they go out there to look for a job.”

As a commercial real estate professional, Sam Chandan is anything but invisible.

Chandan serves as the associate dean of the Schack Institute of Real Estate at New York University’s School of Professional Studies, as well as the Larry & Klara Silverstein Chair in Real Estate Development & Investment. In addition, he’s founder of Chandan Economics, economist laureate of the Real Estate Lenders Association, a Forbes contributor and the host of two podcasts—The Urban Lab and The Real Estate Hour. Chandan also happens to be one of the highest-profile gay men in the U.S. commercial real estate industry.

Chandan’s visibility as a member of the LGBTQ community who works in commercial real estate doesn’t necessarily extend to his LGBTQ colleagues, though.

“I know many LGBTQ individuals working in commercial real estate, but only a subset of them are comfortable being open,” Chandan says. “The most troubling thing for me is that in 2021, when I’m talking to my LGBTQ students, very few of them know an LGBTQ professional in the industry. The visibility is not there, and that is deeply troubling.”

To improve that visibility, Chandan is leading the launch in February of the Real Estate Pride Council, which he chairs. The council describes itself as a global association of LGBTQ professionals in commercial real estate. Board members include leaders from areas including construction and development; investment and lending; architecture and design; law; government; and academia.

The council seeks to advocate for LGBTQ representation in commercial real estate and to advance the careers of LGBTQ professionals in the industry. The council’s pillars include advocacy, networking, mentoring and research.

Chandan hopes the council can be a catalyst for commercial real estate professionals to be “open and authentic” in the workplace and within the industry. He acknowledges that the predominantly male commercial real estate sector is “more accepting than it had been,” but worries that there’s “still an expectation of heteronormative behaviors on the part of men in the industry.”

In a Q&A with WMRE, Chandan discusses the state of diversity in commercial real estate, the flow of capital into the business, the future of the office sector and the state of investing in industrial and multifamily assets.

This Q&A has been edited for length, style and clarity.

WMRE: What’s your sense of where commercial real estate needs to go in terms of improving diversity?

Sam Chandan: From the academic perspective, we have an absolutely critical role to play in helping to build the pipeline of the next generation of leaders. We have focused a great deal of resources, time and attention on creating scholarship opportunities and creating mentorship opportunities and going out to undergraduate students and high school students to let them know about the opportunity to study commercial real estate and enter the industry. As we build a more diverse pipeline of students, we must support them in their transition to the industry, because many of these students will not have the well-developed, established networks that students from more traditional real estate backgrounds have and are able to leverage.

The industry has spoken, I think, with conviction and consensus about the need to improve diversity outcomes over the last year. I will say that much of it has been performative. When you look at the largest firms in the industry, we see real differences in terms of the plans that have been put in place. There’s a broad acknowledgement of the importance of diversity, but we need to see much more in the way of concrete action. One of the things that we’ve seen is a larger number of women appointed to REIT boards. But in the C-suite of our industry, we have seen very little change when we look at overall diversity outcomes, and that requires serious attention.

WMRE: What about diversity in terms of LGBTQ professionals in commercial real estate?

Sam Chandan: A young LGBTQ person is not able to identify role models or mentors for himself or herself in commercial real estate. If anything, the industry gives the appearance of there being very little room for people to be open and authentic, and that is a source of great concern for me. That’s not because I identify as LGBTQ, but because I have a whole subset of students who experience anxiety around whether they can be themselves when they go out there to look for a job. LGBTQ professionals are in a unique position of having to declare their diversity, so visibility is limited and it concerns me greatly.

WMRE: What trends are you seeing in equity raising for commercial real estate deals and developments?

Sam Chandan: With the stock markets at all-time highs, withdrawals from or rebalancing of stock portfolios is one of the sources of capital for a range of investors looking to deploy money in real estate. There was a tremendous amount of dry powder, a surfeit of undeployed capital, prior to the pandemic and that puts a floor on any correction in prices. At the institutional level and the level of high-net-worth individuals and family offices, you still have significant undeployed capital. For high-net-worth individuals and family offices, the absence of a good range of investment opportunities with attractive risk-return profiles has been a challenge for many years now, and it remains a challenge.

There is capital on the sidelines, and some of it is being deployed in bidding on assets, as you would see in industrial and multifamily. But some of the capital on the sidelines reflects the limited risk tolerance of investors as they wait out the pandemic. Some folks are behaving in ways that are fairly reserved and cautious.

WMRE: Where do you come down on the much-debated future of the office sector?

Sam Chandan: There are certain tasks that rely heavily upon being able to physically co-locate, and there are some tasks that can be done, in fact, more effectively in isolation. When we look at different sectors of the economy and different occupations, there is a variation in where each of those occupations falls along that spectrum. For some types of jobs, physical co-location is absolutely fundamental to efficiency and productivity. For others, it’s not. What we anticipate is some balance in that regard—by firm and, in some cases, by firm culture and not by task. Each firm will find a balance of remote versus in-person work.

We have proven that we can effectively do some things remotely and have proven that the technologies exist to facilitate this. Having remote work as an option to incorporate into our work process in a way that is optimal should, from an economic analysis perspective, be productivity-enhancing as compared to the scenario where we have to appear in the office every day and [don’t] have this other modality to leverage. For some companies, it won’t make sense to do it at all, but having this as part of our toolkit should enhance outcomes.

WMRE: What’s your take on two of today’s most favored asset classes, industrial and multifamily?

Sam Chandan: I think investors evaluating opportunities to invest in or develop industrial space should be mindful of the extent to which the positive outlook for industrial has already been somewhat capitalized into pricing.

With regard to multifamily, the evidence does suggest some rebalancing or some shift in preferences from relatively more urban to relatively more suburban locations. Introducing elements of remote work to the equation will facilitate that. Plus, we have an aging millennial demographic that is now starting to have children in large numbers, and access to good schools is a consideration, as well as the desire for more space. What that means is that we see relatively stronger demand for suburban, transit-oriented multifamily and single-family homes for rent.

The data, however, does not suggest we are leaving the cities en masse, and New York or cities anywhere else will be a hollowed-out core. That’s not what’s happening. But we do see some shifting preferences to relatively more suburban locations. Class-A, high-quality luxury multifamily in the urban core is an area we will have to watch.

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