Less than a quarter of the developers building multifamily housing in Chicago are led or managed by a person of color, a newly released analysis from the Urban Institute found.
The analysis looked at building permits from 2019 to 2023 to identify 207 developers who were requesting permits for housing that included 10 or more units, according to the Urban Institute. From the 207 developers, the Washington, D.C.-based organization narrowed its scope to 177 developers, determining that only 17 had Black leaders, six had Latino leaders and seven had Asian leaders.
The analysis was released Wednesday, along with recommendations for what the city could do to ease the process for developers of color to build more housing units.
In total, that meant only about 17% of the developers had someone in leadership who was a person of color, said Jorge González-Hermoso, a research associate with the Urban Institute.
“We’re in the middle of a housing affordability crisis,” he said. “We know that this is in large part explained by a lack of housing supply, and so in this context where we need to increase the housing supply, we need all of the players to be able to reach their full potential and contribute to the housing supply and the housing stock in our cities.”
In Chicago, officials have estimated in the past that the city is short by 120,000 affordable units. The city is also experiencing an increase in the number of people experiencing homelessness.
The Urban Institute issued a series of recommendations for Chicago that includes offering subsidized low-interest loans or grants for developers; doing more outreach to developers of color before issuing requests for proposals for redeveloping city parcels; and easing regulations that can delay projects, González-Hermoso said.
The permitting process could make building more housing units too expensive or may cause developers to downsize a project, he said.
Earlier this year, Mayor Brandon Johnson’s administration released its “Cut the Tape” report, aimed at streamlining the licensing, permitting and development process in Chicago. González-Hermoso said that’s a step in the right direction.
“We know also that the developers of color on average are smaller, younger firms that don’t have the resources or the connections to navigate all of these very difficult regulations like other larger developers do,” he said. “So if you tackle that as a city, you in a way are making it easier for the smaller players to also participate in the housing development market.”
The analysis also found about 65% of the developers of color were working for a nonprofit firm rather than a for-profit firm, which was an issue they saw come up in other cities they analyzed, González-Hermoso said.
“When it comes to equitable opportunities in business, if most of the developers of color are concentrated in nonprofits, there’s really no opportunity to create wealth for themselves as entrepreneurs,” he said.