The Racial Gap in Commercial Real Estate Ownership

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According to an article by Tracy Loh and Andre Perry in Bloomberg CityLab, the racial gap in property ownership is just as stark in commercial real estate as in homeownership. “Only 3% of Black households own commercial real estate, compared with 8% of white households, and their holdings are much smaller — valued at just $3,600 on average, compared with nearly $34,000 for white households,” according to a Brookings report.

This matters because “Nonresidential commercial real estate generated $512 billion in revenue in 2020. What’s more, racial disparities in commercial property ownership impede Black entrepreneurship, since most Americans who start businesses use their personal wealth — chiefly the equity tied up in property.” As the article explains, “This disparity leaves Black Americans with less capacity to establish and grow their firms — and their wealth.”

The authors also note that property in Black neighborhoods is often undervalued, putting owners in those areas at a disadvantage. “ This costs commercial property owners some $171 billion in aggregate wealth,” according to the Brookings analysis.

“The way to end this cycle is to diversify the owners of commercial real estate as well as change the rules that guide investment.” The authors point to Chicago-based TREND, a social enterprise dedicated to changing the landscape of commercial property ownership by facilitating more equitable ownership models. In one example, TREND invited local residents to become co-investors in a 47,000 square foot shopping center for as little as $1,000. “This innovative ownership model creates wealth for investors and provides opportunities for Black entrepreneurs and community residents to work on the property.”