[ad_1]
City skyscrapers and office parks may remain scarcely occupied in the post-pandemic work era, but commercial real estate player JLL’s business is not slowing down, thanks to the company’s embrace of technology and high-growth opportunities to adapt and prosper.
The Chicago-based commercial real estate company, one of the largest in the world, has invested heavily in developing its own homegrown facilities management and sustainability software and service offerings aimed at high-growth commercial ventures such as cloud data centers, e-commerce warehouse operators, and even fast-food chains such as Wendy’s to keep its own $20 billion empire growing.
JLL, for instance, provides facilities management services for many cloud and data center operators. More recently, the company launched Carbon Pathfinder, an AI-driven sustainability software planning tool that is sold as SaaS or a suite with professional services.
“AI is definitely one of the key differentiators JLL has [to compete] against competitors, and sustainability is another key driver for us from the technology side of our business line,” says JLL Technologies CTO Yao Morin, who formerly held the same title at StubHub, claiming JLL is well ahead of other commercial real estate brokers in the technology realm.
“No other company can do it because we have the AI technology and data to understand the kind of investment required, the regulations, and what it takes to make a building sustainable,” the CTO says of the net-zero carbon planning tool, adding that
JLL’s strength lies in its extensive portfolio of leasing and selling brokerage services as well as its technology services arm, which has also developed tools for financial reporting, energy usage, and HVAC compliance.
“We have a very diversified portfolio,” says Morin, who oversees roughly 1,000 IT employees within the company’s technology arm but estimates that between 2,000 and 3,000 employees in total are developing, selling or servicing JLL’s software.
Pivoting to tech provider
JLL’s move to develop facilities management software is part of an expanded business model that has enabled the company to perform well in tough times, says Morin, who is employing a hybrid strategy for software development in which JLL Technologies will both build in-house and partner with other SaaS vendors.
At the heart of JLL’s transformation into a technology provider is the cloud infrastructure JLL built using AWS, Google Cloud Platform, and Microsoft Azure, as well as Snowflake for data storage and Azure AI and Databricks for AI models.
That last part is key for JLL, as Morin sees the evolution of AI offering JLL more opportunities to provide services to existing customers and to gain new ones. “We are very serious about leveraging AI and generative AI to its full potential to solve our problems,” she says.
To date, JLL has been developing classic AI models using cleaned and structured data in table format, Morin says. For example, one model incorporates rent and lease terms for customers in the 84 counties in which JLL operates. Currently, the company’s IT experts train algorithms to extract the most structured data on its leases; this data is then fed into the AI model.
But the availability of generative AI and large language models (LLMs) has been a major advancement because they enable JLL to incorporate all types of data, not just the most structured, Morin says.
“We do a lot of paperwork in leasing and contracts, pages and pages of legal documents in multiple languages,” which has thus far been challenging to incorporate, the CTO says. Generative AI and LLMs are changing all that. “They can directly process different languages in a very natural way. You don’t have to clean it up. You can just give the lease to generative AI models and ask it to extract all of that information itself.”
Morin views generative AI as a “very revolutionary technology” and notes that it is providing efficiencies that are freeing up developers’ time and will expand what JLL can accomplish. “It has completely changed the game of how we can use the information,” she says.
Of course, JLL has only just begun to use generative AI and LLMs. The company has also issued guidelines to its software developers and business executives about how to protect client data and define what they can and cannot use.
Evolving the core businessStill, it’s no secret that the shift to remote working has had a negative effect on JLL’s business. Aside from its software development arm, JLL, like other commercial real estate brokerages, is under pressure to find new prospects. According to JLL’s own research, so far in 2023, the range for physical occupancy compared to pre-COVID levels is between 45% to 65% in the US, for example.
To counteract that, JLL has targeted commercial segments that are experiencing high growth, such as cloud and data center operators, which require lots of square footage.
“Commercial real estate covers many different things,” Morin says. “We help data centers, hospitals, science parks, and e-commerce companies that are booming to buy and sell buildings. Data centers like cloud infrastructure are growing; especially in the wake of AI, there’s been a huge demand for data centers.”
Moreover, the demand to outsource facilities management, which increased during the pandemic, remains robust as workplace environment strategies remain in flux, the CTO notes.
“Google and Facebook don’t manage facilities themselves and they outsource us to do [that],” Morin says. “Someone has to change the toilet paper and make sure there are enough snacks and coffee for people in the office.”
One analyst says the commercial real estate industry is adapting and changing its business model to meet post-pandemic demands and emerging technology needs.
“There has been a significant shift in the capital markets over the last 20-plus years from tangible to intangible assets,” says Gartner analyst Janel Everly. “There has been a significant push from manufacturing and heavy tangible asset–intensive corporations to diversify their portfolio to incorporate intangibles.”
JLL is taking that route, Everly says, seeing the commercial real estate giant incorporating more “as-a-service” offerings, along with its move toward facilities management software.
“As it relates to data centers and e-commerce warehouses, it is mostly driven by demand and the macro real estate shifts in space type utilization,” she says.
Artificial Intelligence, Digital Transformation
[ad_2]