This is how real estate is adapting to the ongoing pandemic according to JLL CEO Guy Grainger


Over the past few weeks we have looked at how the current Covid-19 pandemic is affecting the Residential and CRE markets and the technology deployed there to counter the current emergency. I spoke to industry experts to get their insider views and perspectives. In this final episode, we will close the three-part miniseries by giving an overview of the different markets and geographies. To that end, I enlisted the help of JLL EMEA CEO Guy Grainger, who shared his company’s global outlook for real estate and proptech.

The main cross-sectoral changes since the start of the pandemic

As we have already mentioned, real estate trends that already existed have accelerated at the speed of light since the start of the pandemic. When it comes to the workplace, it’s clear that flexible space is here to stay. Many organizations and managers had not embraced flexible working before the pandemic, but they now recognize that giving employees flexibility increases business performance. As a result, the workplace will be redesigned and Grainger believes we will see a greater focus on collaboration and innovation, but also on health and well-being – two of the main areas of focus for business leaders. . Training also plays a key role: some industries such as the legal sector cannot carry out their distance learning programs in a compliant and diligent manner, therefore the workplace will continue to play a key role (if reinvented).

Consumer trends have accelerated, fueling demand for logistics. This is due, as we all know, to the rise of online spending that has moved from mid-cycle to full-cycle. The balance between the online and offline mix has shifted firmly online, and the million dollar question now is how to reuse retail stores.

Regarding hospitality, Grainger shared, “I don’t think many anticipated the vulnerability of the hospitality industry in the near term. It’s a tough space and only the most versatile and resilient companies will make it through. »

The pandemic has also had a clear effect on the environment and long-term sustainability agendas of business leaders, but there is a lot of work to be done from a regulatory standpoint. The dynamics of cities are changing and, as Grainger said, “the model of public transportation in big cities has to change to attract people. Business travel will also change for good – it will become a smaller market.

Geographic Differences and Asset Classes

There are significant differences between geographies and asset classes in the effects and response to COVID-19, but they are very much dependent on the time scale. In the short term, some countries have been more resilient and versatile than others when it comes to staying ‘open for business’. According to Grainger, Germany has been very successful in this regard, as its tracing system has given its citizens the confidence to restart their lives after the first lockdown. This has resulted in a slightly lower economic impact on Germany to date compared to countries like the UK and Spain, where people’s confidence to return to work was not as strong and this has had a deeper impact in the short term.

However, much of the European continent is now in the grip of the second wave and it will be another real long-term test, as it remains to be seen how nations (and Europe as a whole) will respond and emerge from this crisis. . Grainger said, “It’s too early to tell. No one knows for sure which strategy will prove the most sustainable. We know that we are in economic difficulty and that some nations have a more resilient economy than others and will therefore react more quickly and create jobs. The current situation works in favor of some of the biggest economies, but it’s a marathon, not a race! »

As discussed earlier, the logistics sector has benefited from the ongoing pandemic due to the rapid shift to e-commerce. Industrial real estate also benefited: according to Granger, investment volumes in space increased to €23.4bn (+18%) in EMEA in Q3 2020, a sure sign of confidence in the sector. The residential and multifamily sector also showed resilience with €41 billion invested in EMEA at the end of the third quarter, an increase of 17% compared to the same period in 2019. This most likely indicates the importance that investors place on rental income. , because people may not all need offices anymore, but they still all need housing.

The conversation about what the workplace will be like in the future is ongoing, as mentioned earlier. Grainger thinks “it will definitely be reinvented. Although we are seeing a drop in demand in the short term, we are seeing an increase in dedensification, continued technological innovation to improve usability and safety, and changes in travel habits. All of this leads to new approaches to office design and site planning. Employers will need to strive to make their workplaces goal-oriented. They will need to create spaces where employees feel the need to go and use. In order to reimagine the workplace, companies will need to reinvest. »

JLL’s long-term visions for real estate

The main trends have remained constant throughout 2020. JLL has seen an increase in capital demand for investments in real assets over the past 5 years and this has not changed in the current year . Real assets – especially those that yield rental income – are seen as a safe haven investment and, given the volatility in financial markets this year, investors have shown a strong appetite to reallocate a growing share of their equity to assets. real.

The trend around urbanization has however changed. Cities have generally grown all over the world, but more attention is now being paid to their attractiveness after COVID-19. The focus will be more on the quality of life and the opportunities people have access to in the cities where they live. As Grainger put it, “some cities, especially with devolved powers, will emerge from the crisis stronger than others – if they have the power and the resources to invest in building a better post -coronavirus, focusing on aspects such as safety and sustainability.

The effects of the pandemic on JLL’s strategy

JLL’s strategy is two-fold, as the company focuses on both investor clients who increase their capital allocation into real estate and corporate occupiers who outsource their real estate needs. These two primary goals are still relevant as its clients now work to optimize their portfolios, which Grainger says strengthens JLL’s strengths as an international platform.

And proptech? Grainger strongly believes that technology and innovation are an essential part of any real estate strategy. He told me that “we continue to increase our investments in technology real estate solutions and sustainability products. Business demand for technology-enabled buildings is only increasing. At the same time, there is a greater focus on positively impacting the world, so enabling companies to achieve their ESG goals through their real estate operations becomes a more valuable service.

While at the start of the pandemic, JLL focused on maintaining cash and managing costs, Grainger believes the company is now on track and ready for the future. He believes the business is showing strong resilience in the current uncertain climate, as over the past decade it has diversified its services into a wider range of transactions, property and facilities management and advisory. strategic.

As long as we grapple with the COVID-19 pandemic, the future remains uncertain. It will be exciting to watch how industry players such as JLL and its wide range of customers adapt and evolve with these changing times. Change is also brewing within JLL, as it was recently announced that, following an internal reorganizationGrainger will become global head of sustainability and ESG services while Andy Poppink, CEO of the technology-focused Western US region will become CEO for the EMEA region Markets. This change was part of the final stage of JLL’s two-year transformation program and will certainly cement sustainability and innovation at the heart of the company’s strategy.

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