Competing for Green: JLL’s Big Move

 

Earlier this year, I posted about how the big players in commercial real estate were under enormous pressure to figure out how to deal with the mass greening of their real estate portfolios.

You can see in this linked story that the major investment management firms are not being shy about making big moves in order to stay ahead of the curve on this developing area of real estate practice.

And those moves now include acquiring the consultancies who are responsible for developing the green buildings ratings system tools. Case in point: Jones Lang LaSalle’s purchase of ECD Energy and Environment Canada, Ltd., the developer of the Green Globes rating system.

The Co-Star story plays up a USGBC LEED vs Green Globes competition.  However, I didn’t see much of that competitiveness within the quotes from USGBC’s Mark Heisterkamp and JLL officials. They all politely downplay that aspect.

The Green Journey Take
Acquiring a consultancy is not a new thing, I know. Buying the folks responsible for developing the key technology used to assess a property’s greenness represents a new milestone on the path to
sustainability that deserves watching.

Think about it: what if a major global real estate investor-manager, or even a Microsoft-like tech
giant bought the entire development team of Argus, but left the Argus software itself intact and separate with a non-profit? What would “the rest of us” think? While Green Globes is not as prolific as LEED (or Argus) here in the U.S., it has been relevant to the groups who, for some reason or another, have not been able to embrace LEED. The Co-Star story focuses on the potential competitiveness between the two ratings systems, but it is missing the broader competitiveness issues sustainability is triggering among real estate investors.

The move by JLL underscores sustainability’s credibility with top-tier investor-managers: the fact that major commercial real estate investors are putting serious dollars into enterprise technologies to green their assets, even though much of the evidence about NOI and valuation benefits is still anecdotal and technically inconclusive about the exact benefits these investors will ever realize. The investment community has already decided and are not waiting around for the “real” proof.

What is also interesting is that this particular type of move — buying the particular consultancy which developed a ratings tool, also highlights the point of pain (and value) in our industry. That’s the enormous unfilled demand within commercial real estate for new talent, best practice and structured, efficient approaches to transitioning the modern property operation into a sustainable one.

In other words, professionals who already “get it”and have embedded “sustainable intelligence” into their treasure chest of commercial real estate talents are probably in hot demand.