In this episode of Deconstructed, we sit down with John Myers, Managing Director of Property Management at JLL.
John is the Regional Director of a team responsible for over 50 million square feet of office, industrial, and mixed-use assets. He’s primarily responsible for new business development, client relationships, leadership, and strategic planning.
Post-Pandemic Focus, Fads, and Trends
Many buildings shut down in 2020, with most people working remotely. So the first area John’s team is paying attention to is the physical occupancy of buildings.
The shift to remote work was a transformative event for the industry. But in JJL’s markets, they’re seeing a significant amount of people returning to offices.
Large companies like Twitter are claiming they will stay decentralized forever.
John says, “Fads and trends tend to look identical in the beginning.“ So although there are more remote workers right now than there were previously, it’s hard to guarantee if it’s a long-term trend or not.
John believes it will take another year or more to gauge the long-term effects of what we experienced in 2020.
The vast majority of tenants in the office sector have continued to pay rents through all the changes, which has kept the value of buildings steady through everything. However, John believes building values will be tested over the next few years as leases expire.
Engaging New Technology
Commercial real estate has been historically slow to adopt new technologies. But right now, John sees significant changes in commercial real estate with proptech—specifically on the leasing side with virtual tours and on the ownership side with helpful analytical tools.
He sees three main buckets of technology in commercial real estate.
- Building operations, including areas like mechanical plants, elevators, and access control systems
- Manager’s tools to operate the facility
- Tenant-facing technologies like virtual concierge services
These three areas are seeing the rapid engagement of technology in the industry.
Barriers to Rapid Technology Adoption
Each commercial property has different ownership with different investment objectives and different hold periods. The individualization of each firm causes various barriers to rapidly adopting new technologies.
If an owner entity owns a building for ten or 15 years, they might invest in a technology that takes five or ten years to get a payback.
But if an owner is only holding a building for three to five years, they look at a rapidly accelerated payback to justify the expense of new technologies.
Some ownership groups are also much more inclined to adopt new technologies than others. Some firms want to be on the leading edge of the technology adoption curve. Some don’t want to because they’re going to sell the building in a year or two. They’ll leave certain things for the next owner to handle.
Does Projected ROI Help Decide?
You have to look at it on the micro-level.
Technology that provides a very incremental improvement in the operations is less likely to be adopted. On the other hand, if it’s a tenant platform that increases the likelihood of a lease renewal, it may be more likely to be adopted.
$100M Technology Fund
JLL is aggressive about identifying and recommending valuable technologies to owners.
They started a $100 million technology fund to invest in startups for commercial real estate. In addition, JLL has an enterprise that helps identify, sort through, analyze, and make recommendations to owners about commercial real estate technology.
There are approximately 2,500 different companies that offer a technology solution for commercial real estate.
Their role is to help owners sort through the buffet of options and pick the solutions that can help them make their assets more valuable.
Keys to Choosing What CRE Technology to Implement
John says to be open-minded and willing to explore technologies that you might not have considered in the past.
The technology available today is impressive. But it’s only as impressive as what you do with it. And if you don’t know about new tech that can help you, you can never do anything with that new tech.
Beyond just your profession, John points out it’s also essential in your personal life to experience the amazing new technologies available.
Commercial Real Estate Career Advice
John gives us three tips for a promising career in commercial real estate—or any industry for that matter.
First, be confident in the advantage of commercial real estate having tangible assets. You (or someone) will be needed to manage, lease, and own them. And it’s an enormous industry with plenty of assets to manage, lease, and own.
Second, stay curious and open-minded. There are many opportunities out there, and once you see them, they’ll be in your mind forever.
Finally, develop people skills. Technology skills are important, but people skills are vitally important. Being good with people accelerates your career in any industry, including commercial real estate. So be good at dealing with people.
You can hear more from this client in the episode, which is brought to you by WorkSpace. WorkSpace was built for CRE professionals like you. Make quick and confident decisions to deliver greater investor returns. Learn more and contact us at GoWorkspace.com.