“If there’s one job I would love to do,” says Guy Grainger, “it’s to be London mayor.” Stranger things have happened over the past 12 months.
It was last June that Christian Ulbrich became global chief executive of JLL, a move that saw Grainger join the global executive board as head of EMEA and Chris Ireland take on the running of its UK operations. A year bookended by the EU referendum and an unexpected general election result had no shortage of drama in between for JLL: from shareholder rows over remuneration packages to a number of key departures from the business. Throw in the rise of populism around the world, together with the disruptive influence of proptech, and it has been a hell of a year. Could Grainger be floating the idea of a political future because he yearns for a quieter life?
Not a bit of it. He and Ireland have plans for the next three years and beyond to reshape the JLL business and, in Grainger’s case, to perhaps play on a bigger stage.
Four and a half years ago, when Grainger became chief executive of the UK business and Ireland his chairman, he talked of a five-year vision that would prioritise people and tech. Both endure, but rebalancing the JLL business is dominating his thinking too.
JLL’s goal is to build a platform whose revenues are split evenly between occupier-related and investment-related earnings. And that requires change on both sides of the Atlantic.
“In the Americas 70% of our business revolves around providing advice to occupiers,” says Grainger. “In Europe 70% of our business is around investors. So what we are trying to do is invest into our Americas business around the investor business, capital markets and other areas of the business, and in Europe our strategy has been to build our occupier business.”
A 50/50 split is the long-term goal for Europe. “At the moment, occupiers outsource about 20% of their work, and we’ve got a decent market share of that,” he says. “But the trend that we are seeing is that occupiers are outsourcing more and more work. So the engineering services company we bought, Integral, has great coverage across the UK and it is a critical part of a lot of people’s business.”
But FM isn’t all plain sailing. The cause is not yet clear, but as British Airways’ FM provider CBRE is in the spotlight over the airline’s recent IT failure, which grounded planes, does that give pause for thought?
“The reason it’s of interest to people like us to go into that area is it’s a critical part of the way businesses run. Now I would say for one of our clients, Amazon, we play a critical role for them in their supply chain. When you order something, actually JLL is involved in getting that delivered. So as a result we are critical to Amazon but, yes, that comes with a risk and we have a massive responsibility to perform. But you also become a real strategic partner for them.”
Mergers and acquistions
M&A will be a continuing part of JLL’s growth story, with businesses that improve its offer around tech and occupiers particular targets. But don’t expect a rash of acquisitions in the UK. “I am not focused on acquisitions to grow the UK business at the moment,” says Ireland. “We are focused on organic growth and we are focused on doing what we do better, more efficiently.”
And it won’t just be through acquisition that JLL grows its proptech footprint. “I don’t think it will be one way,” says Grainger. “It will be through investments, like a VC approach. Through acquisition. Also by recruiting a new skill set.
“I am convinced that in next five years in this industry we will see considerable change. We have recently partnered with Seedcamp, one of the best enterprises for accelerating proptech companies and tech companies generally, but they are specifically focusing on proptech with a new venture called Concrete, where the investment partner is Starwood. We have come in as their strategic partner. And that is really for us to learn, to get access to new companies, to assess them and to really be a sponge. It is really exciting and I am personally very involved in that because I think that you need to lead from the top with technology.”
Artificial intelligence will be a key driver of that change; it already is, says Grainger. “We have done a joint venture with a company called Leverton which uses artificial intelligence and machines to read leases. When I was a graduate, all I did was read leases, but now machines can do it. We need people to check them as well, but it is a far more efficient way of doing it. So, yes, it’s here. Let’s not deny it. The question is: what impact is that going to have on jobs?
“You have a responsibility then to try to reteach people, relearn, re-educate and upskill people so that you can use them in different ways. But if as an employer you don’t do that, then it will affect jobs. So that is when, as a business leader, you have real choices to make. We need to embrace artificial intelligence otherwise we will get left behind, but what do we do about training our people, retraining our people so that they can do something else?”
Staff churn
Ah people. When markets turn, people churn. But over the past year JLL has experienced higher churn than most. “There has been an element of deliberate change and a different emphasis,” says Ireland. “But having said that, you’re absolutely right. Quite a number of the departures that we had were not planned, and quite a lot of them were good friends and remain good friends and colleagues.”
It has created opportunities for others, says Ireland, and the business is now in hiring mode, with alternative markets, build-to-rent and occupier services top of the list.
A row over executive remuneration also thrust JLL into the headlines for the wrong reasons. Al Gore’s Generation Investment Management, JLL’s third largest shareholder, took issue with the $11m (£8.5m) pay granted to former chief executive Colin Dyer last year. “A clear example of pay for failure,” said Generation. No activist investor, it was the first time it had gone public in this manner since its formation in 2004.
“It is really important for us to listen to that,” says Grainger. “I am pleased to say that at the AGM the shareholders voted for the reinstatement of our chairman, Sheila Penrose, and the board of directors. And actually reiterated it with a vote of confidence in the new management and our strategy.” Grainger says many of the concerns were historic, but a distraction nevertheless. “There has been a bit of chat around the business and we have to front up to that,” he says.
Remarkably robust
Given the scale of global uncertainty, trading is remarkably robust – for JLL and for its peers. Last month, JLL reported Q1 revenue growth but a decline in EBITDA in EMEA. The UK was singled out as a market where “strong leasing and capital markets momentum… outpaced market volumes”. Ireland is also hopeful the election could bring benefits. “There is also a general feeling that we might have to have a Brexit outcome that is more favourable to business continuity than perhaps we would have had before,” he says.
Grainger, meanwhile, is looking beyond the near term. “Our industry needs to be a catalyst for change rather than watch it happen around us,” he says. “It will be partly through the work we do with clients, partly what I do with JLL, but also interacting with those political changes. Making sure that we as an industry actually give something back to society in terms of the built environment that we provide.
“I don’t want to say I am too political myself, but I feel I’ve got a much bigger purpose than just actually being a property person. I am a business leader now, I am responsible for 10,000 people across Europe, and I take that responsibility very, very seriously.”
A mayoral manifesto? Yes, stranger things have happened.
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
