No surprise to anyone in business, the foreign presence in the U.S. economy is on the rise. In fact, the U.S. Bureau of Economic Analysis reports that “Expenditures by foreign direct investors to acquire, establish or expand U.S. businesses totaled $296.4 billion in 2018, up 8.7 percent from 2017.”
What’s more, border wars aside, Pew Research reveals that the foreign-born U.S. population hit a record 44.4 million two years ago. With so many businesses and workers coming to America, virtually every aspect of property management is impacted. And with that influx come very specific challenges and, possibly more important, major teaching moments.
“In the past couple of years, we’ve seen more foreign investment, especially in the major markets,” says Los Angeles-based Brian Jennings, managing director of U.S. property management operations for CBRE, AMO. “We’re seeing a lot of Asian and German capital in particular.”
In addition, he notes, tenants from a variety of countries are signing leases. “It’s a diverse group.”
The Challenges of Diversity
With that diversity comes the challenge of blending U.S. and foreign cultural norms and expectations as well as explaining local regulations that, for many immigrant tenants, are themselves foreign. “From a cultural standpoint,” says David Petersen, CEO of NAI Hiffman Commercial Real Estate in Oak Brook Terrace, Ill., “each country has a slightly different approach to business, lifestyle and how they want to be communicated with.”
On the ownership side, he notes, cultural differences extend from the negotiation table to the payment process. “Foreign investors bring their cultural and religious approaches to negotiations,” he says. “Take a Saudi investor/owner we worked with. There are Sharia laws they follow that provide guidance on who they can lease to. Then there are countries that take different approaches to paying bills. Some cultures dictate payment in 90 days. Others say 10 days.”
Needless to say, cultural divides can make themselves known on the tenant side as well. “We’ve shown space to potential tenants from a specific country that needed to be sure the entry door was facing east,” he says. “We’ve also served tenants that have a hierarchical structure dictating how the space is laid out and where the company chairman will sit relative to staff.”
“The cultural divide can be wide,” Jennings says, a fact that can extend to “how to use the restrooms. We’ve had tenants that require hand and foot washing, and another U.S.-based tenant complained.”
Jennings also relates the tale of an office building tenant of his “that was cooking food and brought burners into their space, setting off smoke alarms. It was a practice that, again, was totally accepted culturally in other parts of the world but not in ours. Besides, it went against regulations about cooking and open flame within the office space.”
Skeleton crews on religious holidays can also befuddle tenants who might not recognize Christmas or Hanukkah. “Foreign tenants working those holidays have asked why they don’t have full janitorial services or why these services are all at once costing them in overtime charges.”
For Benjamin Wickham, CPM, director of affordable housing at the Sonoma County Community Development Commission in Santa Rosa, Calif., the obvious emphasis is on homes. But he has shared many of the same challenges Jennings and Petersen relate from the commercial side.
“Much of my experience with housing people from foreign cultures comes from when I was vice president of operations for a third-party management firm in Portland, Ore.,” he explains. “There’s a vibrant immigrant community in Portland, with significant Somali and Vietnamese communities and growing communities from Cambodia and China. Many of the residents we dealt with were refugees.”
The cultural divide made its presence known in “one property we managed that had refugees from Somalia,” he notes. “In a traditional setting, they normally cook food over an open fire with big cooking pots for stews and the like. One family set up this arrangement with a gas burner in the middle of the living room. They didn’t have a concept of the fire hazard or the fact that it’s a code violation.”
In addition, there’s the simple fact of language barriers. “You always face that challenge,” says Wickham. “You can have so many different cultures and languages to deal with in a diverse market like Portland that it’s often difficult for management staff to even tell which language is being spoken.”
Add to that the problem of illiteracy, especially in poorer refugee communities. “Many of the Somali refugees we worked with were illiterate, largely due to constant war and upheaval in Somalia,” he notes. “So even if you publish something in Somali, many wouldn’t be able to read it.” For this and many other reasons, including plain decency, “You can’t just slap a 90-day notice on a door.”
Clearly, how managers deal with foreign communities reflects not only on management style, but reputation as well. And every professional we interviewed said the same thing: Care and sensitivity are the keys to making foreign occupants feel at home.
Tearing Down Walls
“Such issues pose delicate situations, necessitating a very diplomatic and respectful approach,” says Jennings. “Granted, we as managers can make only certain accommodations, because we’re bound by our fiscal and legal responsibilities. But respect is always key.”
Brian Jennings and Benjamin Wickham share more than building occupants with interesting cooking styles. Both did stints in China and returned with opened eyes.
For Jennings, the revelation came in the form of a greater appreciation of U.S. property management styles. “My biggest revelations were how much they invest in building new real estate and that management in the U.S. is a much more mature discipline. That’s one of the reasons we were hired—to implement Western management standards.”
Given the U.S. penchant for reverencing the old with classic architecture in refurbished buildings, Jennings expressed surprise at what he noticed was the Chinese approach to older assets. Namely, when a building has reached the end of its useful life in China, “They tear it down and rebuild.”
The two years Wickham spent with his family in China had many more personal ramifications. “The biggest cultural shock was being the people everyone stared at—we were the unusual ones. My wife and daughter have blue eyes and light hair, and there weren’t a lot of other Americans in that area. So we were a constant object of interest, curiosity and occasionally even negativity. We had never been in that kind of situation before, and it took us quite a while to get over our own initial negative feelings. It was a real eye-opener.”
And it informed his professional role when he came back to the U.S. “It helped us better understand some of the challenges that folks from different countries face, challenges they have to deal with all the time. It definitely gives you more compassion.”
So is understanding. Unless a manager knows firsthand the sting felt at the receiving end of prejudice (see sidebar), sensitivity training is a vital part of professional growth.
“We do our best to educate our managers,” says Jennings. “A lot of property management is common sense, but we do have a lot of resources within the organization to assist anyone who comes across a difficult or sensitive situation.”
Petersen agrees: “It’s necessary to be extra sensitive and do a lot of homework focused on the various cultures as you try to build relationships with both investors and tenants.”
Not surprisingly, bridging the cultural divide is a lot easier when tenants and residents are dealing with someone of a similar background. But creating a perfect cultural match can itself be a challenge for personnel-strapped management departments.
“As a large company, sometimes we can do that,” says Jennings. “Sometimes, frankly, we can’t. But we certainly try to align the most appropriate managers for a specific cultural balance.”
“We conducted a broad outreach effort to recruit site-based employees who represented all of our different communities,” Wickham explains. “It wasn’t easy to do because we also needed specific skill sets. In affordable housing, you need people who can do income certification and understand the tax credit program as well as the landlord-tenant laws.”
Fortunately, he adds, they found college-bound immigrants, “who had been in the U.S. long enough to be 100 percent bilingual and bicultural. It’s imperative to have someone on staff who can communicate and understand the culture.”
Hiring carefully was only one part of Wickham’s strategy to bridge the culture gap. “The other part of the strategy was to connect with nonprofit organizations that can work with these communities,” he explains. There are nonprofits that deal with such matters as culture and legal issues. You may have to dig to find them—the homework Petersen referenced. The results are worth it.
Creativity and the ability to reach compromises are also important soft skills. The case of the cooking pot in the apartment is a perfect example. “If there’s an outdoor space, a balcony or patio, tenants we’ve managed have gotten close to what they were used to doing by utilizing an outdoor grill,” he says. “Everybody will have to give some ground, as long as we continue to comply with code and fire safety requirements.”
The same approach worked in Jennings’ bathroom dilemma, in which, “I had to meet with the immigrant tenant to explain to them what was and what was not acceptable in a U.S. office environment. Thus, what they were doing was not acceptable, and they were asked respectfully to stop the practice.”
And what about the foreign tenant who questioned the odd holidays Americans recognize? There’s always the fallback of the lease, says Petersen. But there’s plenty of ways to ease the frustration short of that resort. “We all need to be more sensitive to how our memos are written and—even though it’s an overworked term—be more politically correct.”
Hard Numbers, Soft Skills
The soft skills mentioned above also come into play when dealing with the hard reality of regular rental payments. Wickham notes that this was especially true when dealing with refugees, whose financial situations were often volatile.
Interestingly, they were particularly diligent about rents due. “I didn’t notice many problems with paying rent,” he says. “Even folks who were in rescue situations prioritized payments.
“At one property, we worked with a refugee family from Sudan with nine children,” he recalls. “For them the financial situation was such that if one thing went wrong in their lives, they wouldn’t be able to pay their rent. So we worked with a service coordinator who was also from Africa. He didn’t speak their native language, but he connected with them culturally, and together we created a small-loan program with a local community development financial institution.”
The program not only helped the family meet its regular obligation but also helped them avoid “predatory lenders who’d charge 35 percent compound interest. We gave them peace of mind.”
Language, dress and menus may all change. In this melting pot, there are only two constants. First, people are people, wherever they’re from. And second, as David Petersen says, “Respect is everything.”