Building a Network of Diverse Developers

City environments are made up of buildings, transit stations, streets, parks, and other man-made structures. Also called the “built environment,” these systems shape our lives in many ways – from how we travel to our health outcomes to even our economic potential.  

Whether we realize it or not, our built environments often reflect the people who created them. In the real estate sector, these people are overwhelmingly white men, leaving developers of color out of the equation. According to a 2023 Grove Impact report, Black and Latinx developers make up less than one percent of the sector nationally. Systemic barriers like lack of access to capital, resources, and even connections make it harder for developers of color to break into real estate and advance projects.  

To address this gap, The Chicago Community Trust’s Catalyzing Neighborhood Investment team has been leveraging grant programs and initiatives to build a more robust network of diverse developers in the Chicago region. The Pre-Development Fund, a grant program which covers early-stage costs for commercial real estate projects intended to revitalize disinvested communities, has provided $5.8 million in grants to 52 projects, with 98 percent led by developers of color. Additionally, We Rise Together: For an Equitable and Just Recovery, a five-year initiative aimed at spurring economic recovery from communities hit hardest by the pandemic, has provided $38 million in grants to 30 anchor neighborhood projects – all led by developers of color.  

“Our funding programs aren’t just about getting projects off the ground and bringing economic opportunities to disinvested areas, but also ensuring excluded parties who represent Chicago are part of building our neighborhoods,” said Chris Eagan, a program manager on the neighborhood investment team. 

Creating Economic Impact 

According to that same 2023 report, increasing participation for developers of color would have immense economic impact, including generating $106 billion in revenue and providing close to two million jobs for the real estate sector. At the neighborhood level, developers of color are also more likely to prioritize sourcing talent and vendors locally. 

With more than 20 years of experience in hospitality and business development in Chicago, Cecilia Cuff can vouch for the economic impact developers of color provide for their communities. She says many of their projects tend to be what she calls “little cities” — mixed-use spaces that offer jobs, a variety of amenities, and opportunities for residents to connect and socialize.  

“Development led by people of color can really breathe life into any community,” she said. Her real estate and construction advisory firm, The Nascent Group, is currently working with two Pre-Development Fund grant recipients: Black-owned real estate firm Policy Kings, which is developing a mixed-use space near the 51^st Street Green Line stop, and Opkara House, a cultural center and restaurant being developed in Humboldt Park.  

According to Juan Saldana III, co-founder and principal of Black and Latinx-owned real estate firm P3 Markets, funding projects by developers of color is a great source of job opportunities for disinvested neighborhoods. P3 received a Pre-Development grant in 2023 for 43 Green, a mixed-used, equitable transit-oriented development project that is bringing affordable housing and retail space to Bronzeville’s 43^rd Street corridor. From whom they hire for construction jobs to what vendors they are sourcing from, Saldana says that P3 has been intentional about supporting Bronzeville’s economic growth.  

“A lot of what we see in our communities is that they want to be economically resilient and independent,” he said.  

Working with Residents to Address Their Needs 

For P3, a project cannot be successful without resident buy-in first. The firm spent three years gathering resident feedback on 43 Green, engaging them at venues that ranged from block parties to meetings hosted by Alderman Pat Dowell. The firm’s other co-founder and principal, Phil Beckman III, credits his childhood growing up in Bronzeville and his family for instilling in him the importance of building relationships with residents.  

“I think sometimes our industry gets in the habit of just going into neighborhoods to do what they want and leave,” he said. “When we go into communities, we talk to folks and let them share the things they want to see.”  

Housing counseling and development organization LUCHA is another Pre-Development Fund grant recipient that understands the value of engaging residents. Founded in 1982, the organization received a grant in 2022 for a new Humboldt Park headquarters to expand services and provide the community with event space. Because of its work to build more affordable housing for residents who are often at risk for gentrification, outgoing Executive Director Lissette Castañeda says none of these projects are going to be fruitful unless you put in the work first to truly understand what the community needs and wants. 

“We like to start as close to the ground as possible because you’re more likely to get support and get people to understand what you’re doing for them,” she said. “That’s why it’s important to have BIPOC people in this space.” (Castañeda was recently appointed as commissioner of the Chicago Department of Housing.) 

Unlocking Access to Capital 

Because traditional financial institutions are often not set up for large-scale funds and favorable interest rates that developers require to get started, access to capital, especially seed money, is often the biggest barrier for developers of color. Instead, new developers rely heavily on partnerships and joint ventures to break into the market or even source money from people in their immediate circles.  

“Banks tend to loan to people they know, and unfortunately, there are not a lot of banks operated by people of color left,” said Beckman. “You need to be able to show them something first.”  

That is why one of the objectives of both the Pre-Development Fund and We Rise Together is to provide an upfront infusion of cash that will later lead to other larger investments from government and financial institutions. To date, grant funding from the Pre-Development Fund has helped recipients raise nearly $231 million in additional investments – 58 percent of that amount coming from public sector funding, while 37 percent came from private sector capital, and five percent came from philanthropies. For grant recipients that received funding from We Rise Together, that number comes to $366 million in additional investments unlocked.  

According to Cuff, some mainstream financial institutions like JPMorgan Chase have started providing more neighborhood-level lending solutions that make capital more accessible for developers of color and smaller real estate firms. However, she credits Trust grant programs and City of Chicago’s programs like INVEST South/West for helping to create a more fertile environment in recent years for developers of color to advance in the sector.  

“It’s changing the way the landscape looks, and I think our communities are going to be better off for it,” she said.  

Establishing Major Players in Chicago 

The Trust also provided funding to the 2023 Diverse Developers Conference, an annual convening put on by real estate and finance professionals to provide opportunities for underrepresented developers to network, exchange knowledge, and learn about resources. According to Eagan, who participated in a panel about alternative capital solutions, this type of networking and thought leadership is critical to bringing equity into the sector. 

Thinking about how he envisions the future of real estate in Chicago, Eagan says there are a lot of talented developers of color coming through the ranks. His hope is that the Trust’s current funding efforts are helping to set them up for long-term success.  

“I’m excited about supporting developers that maybe in 10, 15, 20 years will rise up and become major players in the Chicago real estate market,” said Eagan. “We would love to say we helped make that happen.”