emerging bipoc developer funds make it possible for people of color to pursue commercial development and construction

Emerging BIPOC developer funds open new opportunities

For aspiring BIPOC developers, opportunities for funding, training are growing

Inequities in capital available for real estate developers of color have been significant historically. But these days, there’s cause for excitement as funding opportunities and initiatives aimed at emerging developers are growing in scope and number. These investments are pouring in from myriad sources, from financial institutions to community groups, laying the groundwork for a more equitable future for would-be developers who are Black, Indigenous and People of Color (BIPOC).

The level of inequity in the industry can be hard to define. While it’s widely acknowledged that the field of developers is predominately white, a New York Times article in 2021 reported that reliable statistics are rare, reporting survey numbers (from 2013) indicating only 4.4% of commercial real estate developers are Black, and only 5% of the members of the Urban Land Institute indicate they are Black or African-American. These figures are an indicator of just part of the BIPOC representation among developers.

Working to level the field in commercial real estate development

When it comes to emerging developers gaining a foothold, securing capital is a primary barrier to success. Enter emerging developer funds, an effort to work toward greater equity in the commercial real estate development realm.

The response to the need for BIPOC developer funds has grown rapidly over the past several years, particularly in the wake of mass protests over racial inequities and systematic racism. A quick online search for emerging developer funds for minorities or people of color yields hundreds of millions of results, ranging from nationally-run programs to smaller state or community-based initiatives. It also includes financial institutions and big-name banks offering programs with deep pockets focused on developers of color. Many funds are slated for specific sectors, such as affordable housing initiatives or commercial real estate, to be developed in often-underserved, lower-income communities.

Challenges remain for emerging BIPOC developers, but there’s hope

Therein lies a potential snag for emerging BIPOC developers. Affordable housing developments frequently provide smaller profit margins. More, developers of color are less likely to have access to generational wealth or a network that can provide private equity. Without equitable capital, competing with developers who are tapped into such income sources can be difficult.

Several organizations are working to change that, too, by offering private equity funds for emerging female and BIPOC developers. Some even offer seed money and professional mentoring, providing essential tools for anyone working to break into the competitive commercial real estate space.

The racial capital disparity is narrowing

Accessing capital is an essential part of commercial real estate development, and for people of color, securing the financing they need remains a challenge. The good news is tools and funds to help BIPOC developers are emerging every day, increasing access for every step of the way, from training and mentorship to early-stage capital to equity capital and loans. From government lending to public/private partnerships, much-needed improvement is happening, which is slowly shrinking the capital disparity in commercial real estate development.