If you follow PropTech at all, you probably already know that real estate services giant JLL recently launched a new division, JLL Technologies. This group encompasses all tech-related activities under the JLL umbrella, including the JLL Spark PropTech venture fund, and will be led by Spark co-CEOs Mihir Shah and Yishai Lerner.
The Spark fund itself was ground-breaking innovation when it launched early last year, as it was the first proprietary PropTech investment vehicle set up by a real estate incumbent. It is one of the bigger players in the real estate VC scene, with $100 million under management, and 14 investments to date. JLL also has a sizable portfolio of technology solutions it has developed in-house or purchased, which the company claims already bring it over $100 million of direct revenues.
The two now sit under the same roof. There is a lot of buzz around this news at the moment, so why is it a big deal? I spoke to Shah and Lerner to find out more.
According to Shah, this change will allow the company, with its 90,000-strong workforce, to “clearly align on a global roadmap for tech products and services both for internal use and for client use.” However, he believes the most significant element to be that he and Lerner – two “Silicon Valley guys” – will now sit on the global executive board of one of the biggest names in real estate… and he is probably right. JLL CEO Christian Ulbrich has been manifesting his intent to turn the company into a tech firm that does real estate for some time, and it would be an impossible goal to achieve without tech people in senior strategic positions.
I asked Lerner and Shah what they intend to do with their enlarged role; Lerner shared that they took on the opportunity because their clients are both occupiers and investors, and they feel there is a gap in the market to provide solutions for both, whether it is by building them internally or by funding startups through Spark.
However, despite the shake up, there will not be any major changes at JLL Spark just yet, with the co-CEOs continuing to lead the team. No additional funding is planned for the fund, as it is still in the midst of deploying its existing capital, and Shah expects it to continue investing at the current pace or faster. Their European and US investment teams will continue to deploy capital with partners Metaprop, Navitas Capital and Concrete VC, and the startups they bet on will still be supported by the growth team, which the company considers to be its true differentiator.
Shah reckons that having Spark under the JLL Technologies umbrella will make it easier for its portfolio companies to reach JLL’s clients. Previously, the growth team would do this by helping them sell their products to the various other organizations that are now part of JLL Technologies. The aim, now, is to have a cohesive go to market strategy for all technology products and services, and to create maximum horizontal access within the division’s remit.
Lerner and Shah both look forward to use their newfound reach across JLL services to focus on opportunities that will have the biggest positive impact for their shareholders, employees, and occupiers. According to Shah, this means making big bets on areas they know they can accelerate, and focusing on them, with the goal of helping their clients figure out their optimal tech strategy and integrate the right products into that. They also want to grow what they already have. For example, they intend to take existing US-based products such as Corrigo global.
The co-CEOs are also very focused on what they call the tenant experience stack; be it conversational smartphone workflow app JiLL for single occupiers, tenant amenity app HqO for multi-tenanted commercial buildings, or resident experience app Livly for multifamily buildings. This goes hand in hand with their drive to deploy tech that can automate mundane tasks in order to free up property managers’ time so they can deliver higher value service to tenants.
As Lerner put it, “tenants want to concentrate on their business, everything else is secondary, and we want them to be able to do this without distractions.” He went on to share that “we are interested in next-gen companies with a strong machine learning component, as it allows for advanced data processing and automation, in order to exponentially improve commercial real estate companies’ current operations with decision-making insights.”
So, is JLL Technologies big news? Well, yes, it is. Placing its co-CEOs on JLL’s executive board definitely shows that JLL is serious about PropTech. Will it translate into a big success for the company? That remains to be seen, and will depend on the one hand by how Spark’s investments perform, bearing in mind that these companies do have a head start on the competition through their access to JLL itself and to its clients. On the other hand, it should also be measured by how much the revenue from its internal technology products will grow from its current purported $100 million base. And, finally, its success should also be measured by its impact on the global JLL business as a whole, both in terms of financial gains and its success in transitioning into a “tech company that does real estate”.