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Letter from the CEO
Strategy and business model
Global strategic priorities (G5)
Integrated service model
Integrated reporting approach
History and acquisition activities
To continue to create on-going value for our clients, shareholders, and employees, both from current and longer-term perspectives, we have identified five strategic priorities, which we call the G5. We have consistently used the G5 approach since 2005. Although we have grown significantly over the past decade, we believe we have a substantial opportunity to continue to grow and prosper by providing our core services within our key markets, whose potential remains large given the global magnitude of commercial and residential real estate, broadly defined. From time to time we may add adjacent services that are not part of our historical core functions, but we intend these to be opportunistic in nature and targeted to individual geographical locations and evolving business opportunities. For example, we successfully expanded the cross-border brokerage of high-end residential properties in London with the 2011 King Sturge merger, followed by the acquisition of W.A. Ellis during 2014 and Guardian in Dublin in 2015. We have expanded the Tetris-branded fit-out business we originally acquired in France and have been introducing it into other countries, including through acquisitions in Portugal in 2014 and in Poland, Germany, and the United Kingdom in 2015. In 2015, we enhanced our service offering for facility management clients by acquiring a cloud-based technology platform called Corrigo.
We regularly re-evaluate whether the G5 continue to be the right priorities for best driving the business forward toward the overall objective of on-going value creation.
G1 | Build our leading local and regional service operations
Our strength in local and regional markets contributes to the strength of our global service capabilities. Our financial performance also depends, in great part, on the business we source and execute locally from our more than 280 wholly-owned offices around the world. We continually seek to leverage our established business presence in the world’s principal real estate markets to provide expanded and adjacent local and regional services without a proportionate increase in infrastructure costs. We believe these capabilities will continue to fuel our competitive advantage and make us more attractive to current and prospective clients, as well as to revenue-generating employees such as brokers and client relationship managers.
Metrics: During 2015, we completed approximately 35,500 transactions for landlord and tenant clients, a 6% increase over 2014, representing 1.1 billion square feet of space.
G2 | Strengthen our leading position in corporate solutions
The accelerating trends of globalization, cost cutting, energy management and the outsourcing of real estate services by corporate occupiers support our decision to emphasize a truly global Corporate Solutions business that serves the comprehensive needs of corporate clients. This service delivery capability helps us create new client relationships, particularly as companies turn to outsourcing their real estate as a way to manage expenses and to implement sustainable practices. These services have proved to be counter-cyclical, as we have seen demand for them strengthen when the economy has weakened.
Metrics: During 2015, we provided corporate facility management services for 1.3 billion square feet of clients’ real estate, a 17% increase from 2014. Over the same period, JLL had 137 new business wins, 75 expansions of existing relationships and 35 contract renewals.
G3 | Capture the leading share of global capital flows for investment sales
Our focus on further developing our ability to provide global Capital Markets services reflects the increasingly international nature of cross-border money flows into real estate and the global marketing of real estate assets. Our real estate investment banking capability helps provide capital and other financial solutions by which our clients can maximize the value of their real estate.
Metrics: During 2015, we provided capital markets services for $138 billion of client transactions, a 17% increase from 2014.
G4 | Strengthen LaSalle Investment Management’s leadership position
With its integrated global platform, LaSalle is well-positioned to serve institutional investors looking for attractive real estate investment opportunities around the globe. LaSalle also continues to develop its ability to serve individual retail investors, particularly in the U.S. and Japan. LaSalle develops and implements strategies based on a thorough understanding of investor objectives and knowledge of local market risks and rewards. We intend to continue to maintain strong offerings in core products to meet the demand from clients who seek lower risk investments in the most stable and mature real estate markets. In addition, we continue to strengthen our capabilities in value-add, opportunistic and debt strategies to meet the diverse range of our clients’ objectives.
Metrics: At the end of 2015, LaSalle had assets under management of $56.4 billion, an increase of 5% over 2014, while raising $5.0 billion of capital.
G5 | Connections: Differentiate and sustain the organization by connecting across the firm and with clients and other stakeholders
Connecting. To create real value and new opportunities for our clients, shareholders, and employees, we regularly work to strengthen and fully leverage the links between our people, service lines, and geographies to better connect with our clients and put the Firm’s global expertise and experience to work for them. This includes constantly striving to strengthen our data and analytics capabilities, and to leverage use of the Internet and emerging social media to gather, analyze, and disseminate information that will be useful to our clients, employees, vendors, and other constituencies. Linking our operations effectively to make service delivery more efficient not only serves client needs, it also contributes to our profitability and enhances our ability to identify and manage the enterprise risks inherent in our business.
Differentiating and sustaining. We also recognize that the value we deliver to our clients, shareholders, employees, and the global community closely relates to our Firm’s people, brand, ethics, and technology. As a professional services company, the focus on our people is paramount. Because our human capital contributes strongly to high-quality client service, this includes a focus on areas such as: employee satisfaction; health, safety and well-being; training and career development and rewards and recognition; and diversity and inclusion. Coupled with a strong brand and high ethical standards, our active role as good corporate citizens enables our long-lasting presence. Our use of technology to provide information to our clients and to improve the ability of our people play an undeniable role in maximizing our clients’ real estate value, shaping our industry’s response to global challenges such as market risk, climate change and urbanization. These values and culture help us embed sustainability principles throughout the enterprise and successfully differentiate us from our competition, therefore ensuring we continue our more than 250-year history.
Metrics: Our Employee Engagement Index, which measures the percentage of survey respondents reporting high levels of engagement with the Firm and their work reached 76% as measured in 2015, up 3 percentage points from 2012, the last time we completed a full survey. Substantially all of the results in the survey improved over 2012 and also were higher than the global norms reported by our independent survey provider.
From Google Analytics, we understand our website received over 20.5 million page views by more than 4.8 million visitors in 2015.
Future development of the G5
We have committed resources to each of the G5 priorities in past years and expect to continue to do so in the future. This strategy has helped us weather economic downturns, continue to grow market share, expand our services by developing adjacent offerings, and take advantage of new opportunities.
Our strategic review has validated the continued potential for our G5 priorities to drive the long-term sustained growth of our firm and deliver real value to our clients. To derive the full advantage of that potential, we recognize the need to accelerate the development of the G5 to meet the challenges of our dynamic markets and the specific themes we have identified such as globalization and urbanization. We will do this by targeting our efforts and capital resources to:
Examples: HiRise (sm), Blackbird (sm) and RED systems bring digital capabilities for managing real estate needs directly to clients in multiple ways (all available on-line through our public website).
Examples: Develop and implement a new electronic learning management system by Human Resources for use globally.
Examples: Adapting the JLL and LaSalle names and refreshing their logos; acquiring the rights to the dot jll (.jll) and dot lasalle (.lasalle) top-level domain names.
Examples: Implementing significant new document management system for legal and other client documentation in our Corporate Solutions business.
By continuing to invest in the future based on how our strengths can support the needs of our clients, we intend to enhance our position as an industry leader. Although we have validated our fundamental business strategies, each of our businesses continually re-evaluates how it can best serve our clients as their needs change, as technologies and the application of technologies evolve, and as real estate markets, credit markets, economies, and political environments exhibit changes, which in each case may be dramatic and unpredictable.