Inside JLL’s technology investment strategy
It is safe to say that technology is rapidly changing the condition of property management. JLL, one of the largest players in commercial real estate, has focused heavily on its technology strategy, investing in proptech companies through its global venture capital fund, JLL Spark, creating technology products internally or by acquiring companies. In the past year alone, JLL’s technology division – JLL Technologies (JLLT) – has assessed over 50 companies to add to their list. The most recent among the wave of buying that has made the cut is Building Engines. This Boston-based property management software company provides a “comprehensive, easy-to-use system that brings together all the technologies and applications used to manage buildings in one place,” according to a statement.
There are many reasons why JLL buys Building Engines, the cloud-based property management solution was recently recognized at the eighth edition of the Real Estate Tech Awards as a finalist in the Mature Growth category, on the one hand. On the other hand, Building Engines already enjoys the trust of hundreds of commercial real estate organizations, including CRE, Beacon Capital Partners, Unico, etc. Although JLL is best known as a commercial brokerage firm, they are also one of the largest outsourced property managers in the world. Then there is the tremendous growth potential of technology for buildings. Global IT spending will hit $ 4.5 trillion in 2022, and most buildings are currently under-equipped for the technology that tenants and landlords now demand.
JLL’s decision to buy well-established technology companies like Building Engines goes hand in hand with its internal technology investments. Asked about the overall strategy behind the many recent purchases, Sharad Rastogi, President of JLL Revenue, said, “Our main focus is to help our customers, so we are looking at their issues and what solutions we can provide to help them. If the solution already exists, we don’t need to recreate it. We can simply partner with the company that provides this solution and offer its services to our customers. However, not all of the products that JLL has created are from acquisitions. In 2015, JLL launched HiRise, an online marketplace where tenants and landlords can log in and complete their entire real estate transaction. It seems JLL thought developing HiRise was the better option, as recent acquisitions like Skyline AI and Building Engines were better bought than built.
An obvious question for a large company that deploys third-party solutions is whether or not it will make them available to its competitors. “There is one term in the tech world that we use: coopetition,” Rastogi explained. “You cooperate in some areas and you compete in others. As these investments mature and things consolidate, we will see more coopetition in real estate. According to Rastogi, Building Engines (and other startups bought by JLL) will always maintain the level of autonomy and comfort they always enjoyed before becoming a subsidiary of JLL. This is important because it marks a separation between the parent company and the data that flows in from the subsidiaries, much of which comes from JLL’s competitors.
JLL’s thinking on investing in technology is twofold: First, there is an abundance of data in real estate, but this data is not being used “efficiently”, hence the rush in integrating construction software. “First you need a recording system that puts the data in a way that you can analyze it,” Rastogi said. “There is a huge opportunity for software creation. The second belief is that there are three groups of customers, regardless of the market: customers with internal IT teams who will deploy the technology themselves, customers without IT teams who just want to buy the technology but need the technology. help to install it in their existing systems, and customers who prefer to outsource the entire process. “JLL is the only commercial real estate company that can offer all three,” said Rastogi. “The beauty is that we can help our customers choose the right technology, but also deploy it and allow them to profit from it, and we can also completely outsource. ”
These big investments by JLL are part of his thesis that technology is changing commercial real estate as we know it. JLL’s current strategy is to seek out the best technology for themselves and their customers, and frankly, it seems to be working. JLL stock has climbed nearly 100% since the same period last year. Integrating technology to help better serve their customers is a critical part of JLL’s strategy, but that’s not all. “As the industry matures,” concluded Rastogi, “we want to bring an integrated stack of technologies. Whether it’s energy management, air quality control or whatever, we want to have it all in one place. By looking for new ways to invest, create or buy technology tools that they can transform and sell outside their organization, JLL seeks to double its technology investments, proving that it is good both to create and buy technology. trying to change an industry.