JLL Shifting To An Investment Banking Model

https://commercialobserver.com/2024/03/jll-riguar…

Came across this commercial observer article yesterday. I’m a little interested in hearing what people think of this shift and how will it affect brokerage going forward. It seems like Eastdil does very well in IS and D/E because of their more IB leaning model and HFF had a similar structure too. I could definitely see a big part of this shift being driven by former HFF producers who want to rebuild what they had before but with a wide range of services like leasing and property management.

 
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That sounds a whole lot like a meaningless circle jerk among JLL corporate executives. 

“In the real estate service industry, the client comes first, but a lot of times — especially in brokerage — the individual comes second, and the company comes third. You’re not going to survive at JLL unless you feel like JLL comes second.” 

Aka "You're not allowed to be a star even if you deserve to be based on your production. The company comes first."  

Just as in an investment bank, JLL’s professionals are now responsible for particular coverage areas

Large brokerages have worked like that forever. Even 10+ years ago, the brokerage I worked for was broken down by coverage areas. 

The company is also leaning into offering data-driven technology

Every company uses data-driven technology. It's 2024. 

“We have the old school and the new school,” Riguardi said. “We’re not abandoning the old school styles, by any means. They still work, and we still have extremely productive people in that space. But we’re also looking to train a new generation of real estate professionals, and at JLL those professionals are going to be expected to act and function more like someone would at an investment bank than a real estate brokerage house.”  

"This star broker thing really gives them all of the power. We're going to make sure the kids coming up work long hours per week without any hope of becoming a star so the corporate overlords keep the power."  

Commercial Real Estate Developer
 

what is the difference? I understand legitimate REIB with balance sheet capabilities vs brokerage. I do not understand what people mean by calling HFF, Eastdil, etc “IB”.

Selling buildings is selling buildings, same with D/E services. For example Eastdil is good where I’m at but also do the same exact thing as every other brokerage in my market.

Genuinely curious if there’s any differentiation. Maybe I’m wrong but seems like JLL are just switching terminology around to further appeal to institutional investors.

 

Just terminology. It means absolutely nothing. They’re doing it for institutional investors and also to trick juniors into thinking they’re going into “banking” so they’re willing to take garbage pay

 

Eastdil has an M&A advisory practice which is separate from investment sales.

 

I never got the banking thing even at Eastdil, it's real estate it's not that complex and you aren't doing the lords work. You're working as a middleman for deals. Crazy the mindset some people at top schools and top firms have about their job and prestige in real estate. 

Funny to hear analysts at top firms like BGO, Two Sigma, PGIM, others with their tech enabled platforms and quantitative methods closing on small walkups or $40mm industrial deals then you go to a small, entrepreneurial firm with less pedigree that is doing the same thing and may have a portfolio of 50-100 properties with low debt making actual money. 

 

Juniors are gonna get shafted on pay at JLL regardless of how they market themselves which really sucks. It’s 2024, analyst pay shouldn’t be between 60 and 80k and interns shouldn’t be comped at 20 an hour. Not asking for an industry topping comp package but something in line with the rest of the industry would be nice.

 

They’d like to think of themselves that way, but this is all just lip service. This is like an apple calling itself an orange. What’s wrong with just trying to be a great brokerage? It’s two entirely different business models.

The best teams at big brokerages already function like an investment bank, with a deep bench of analysts/associates, senior guys driving the BD, pooled bonuses, retainers/account work from institutional clients etc. But this wouldn’t work for 75% of teams.

 

My favorite part was when the capital markets broker bragged about how he’ll now pick up the phone and talk to his colleague on the leasing side for leasing assumptions.

Bruh…is that really a new phenomenon for you?

 

Side question, why do a good amount of JLL folk come off as dicks. I get the vibe that they think they’re better than others in the brokerage world. And yes, a lot of their people do very well but I don’t get the same vibe from the big competitors like CBRE.

 

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Commercial Real Estate Developer
 

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