SB 826 Could Shake Up California’s Biggest CRE Firms

New California legislation could shake up some the boards of commercial real estate’s biggest companies this year. SB 826, which went into effect January 1^st, requires that all public companies have at least one female board member by the end of the year as a way to promote gender diversity in corporate governance. With several large publicly traded real estate companies based in California, it could mean a shift for the industry.

“Some of the industry’s largest publicly traded companies are based here in California, and while those industry leaders  have already begun embracing diversity as a compelling best practice many will still need to add additional female board members to come into full compliance by 2021,” Paige Serden, EVP at Newmark Realty Capital, tells GlobeSt.com. “Most larger companies were a bit quicker to respond to gender diversity to address concerns about “Me Too” issues, but smaller companies did not feel as compelled and have lagged on action. In fact there are several high-profile REITS within California which have not yet developed board diversity, with the recent Board Governance Research report noting that a full 20% of California’s publicly traded real estate companies had no female board representation at the close of 2018.”

California is not alone. Several states are enacting similar legislation. “This type of diversity legislation is taking root in multiple states across the country, and it’s worth noting that this policy focus was inspired by compelling research that speaks to the benefits of it as a best practice for economic health and corporate productivity,” adds Serden. “Always a leader, the California law is the first of its kind nationally and has become an early case study for other states. New Jersey is moving forward next, and Massachusetts, Illinois, Pennsylvania and Colorado expected to soon follow.”