Philly Rise is designed to recruit, train, support and open up access to capital.
Black Americans represent less than 5% of residential real estate developers, largely because they can’t get equal access to capital, according to a recent report by the Urban Land Institute.
Institutional capital – real estate investment trusts and private equity in particular – are the dominant players. Black developers often don’t have exposure to those investors. But a new program in Philadelphia – funded by Barra in June 2022 – is offering developers of color a unique opportunity to build both new homes and their businesses. Philly Rise is designed to recruit, train, support and open up access to capital. The goal: Produce 50 new residential housing units annually for the next five years.
“There is an imbalance, and what we’re trying to do is correct that imbalance by taking away all the barriers, so there’s no reason for anybody to say no,” said Thomas Webster, Philly Rise program director.
Christopher Pitt understands the value of a home more than most: “I grew up in a two-bedroom shack, 10 people showing up. No gas, limited electric and an outhouse, right?” said Pitt, co-founder of PittPass Development Group. That’s why he’s been working in real estate for 20 years, developing affordable housing first in Delaware and Maryland, and soon in Philadelphia. But even with his lengthy experience in the business, Pitt still has trouble getting capital for his company’s projects.
“It is extremely hard,” Pitt said, noting that people like to do business with people with whom they share similarities. “But I just don’t think there’s enough minority leadership in those positions.”
After years of self-funding and borrowing hard money at sky-high interest rates, Pitt turned to Philly Rise, which Webster and his community investment partners call a “real estate accelerator.”
“Our goal with our participants is not to teach them how to rehab or build brand new houses, but how to build successful real estate businesses,” said Webster.
In a series of classes for Philly Rise, industry professionals teach the students, who must already be professional developers, how better to access capital and how to work the system to win city projects.