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JLL Research recently published “The green tipping point” exploring the growing importance of sustainability in the real estate industry. Increasing demand for sustainable buildings from tenants, investors, and regulators is leading to a shift toward greener practices and technologies across the real estate industry. Rising tenant expectations (especially from corporates who need to meet their sustainability targets), investor/lender focus on sustainability, regulatory pressures, cost savings and the prioritization of health and well-being are all leading to higher demand for low carbon buildings, and a need to decarbonize the existing building stock.   

As a leader in commercial real estate, JLL recognizes the importance of decarbonizing buildings to mitigate climate change and align with sustainable development goals. Our sustainability consulting business works with the largest real estate investors and occupiers to help them meet their sustainability goals. To support these efforts, JLL has made strategic investments in technology solutions to advance our client’s decarbonization pathways. Here’s how JLL’s investments in Carbon Pathfinder, JLL Canopy, JLL Hank, Turntide Motors, and ecoworks are helping to achieve this goal: 

Carbon Pathfinder: JLL’s Carbon Pathfinder is a proprietary tool that enables clients to identify and prioritize energy savings opportunities within their real estate portfolios. Planning the carbon pathway is the first step decarbonizing a portfolio. Carbon Pathfinder helps determine the most effective strategies for reducing energy consumption and greenhouse gas emissions, while also prioritizing return on investment, and avoiding stranded assets.  

JLL Canopy: JLL Canopy is a sustainability platform that helps clients to collect, measure, manage, and report on the environmental performance of their buildings. It provides real-time data and actionable insights to assess sustainability goals, track progress, and identify areas for improvement. By integrating energy, water, waste, and carbon reporting, JLL Canopy enables clients to make informed decisions that drive decarbonization efforts. 

JLL Hank: JLL Hank leverages the power of artificial intelligence (AI) to autonomously optimize the management of systems of commercial buildings to deliver increases comfort, air quality, and energy savings. Hank plugs into the existing BMS and creates a digital twin that it then combines with occupancy and usage data to more efficiently manage energy and HVAC systems in buildings.   

Turntide Motors: JLL Spark has invested in Turntide Motors, a company specializing in electric motor technology. By replacing traditional motors with Turntide’s smart, energy-efficient motors, Turntide helps reduce energy consumption in buildings. This technology upgrade provides significant energy savings for HVAC systems, fans, pumps and other building equipment, contributing to overall decarbonization efforts. An investment in Turntide motors can have a payback period of under two years, generating a very high return on investment. 

ecoworks: JLL’s investment in ecoworks demonstrates its commitment to advancing sustainability in the construction industry. ecoworks serial renovation can take a very inefficient building and bring it to carbon neutrality in just a few weeks. ecoworks does this by installing new walls and windows over the old walls, upgrading the roof, adding solar power, and replacing oil and gas heating with heat pumps.  Tenants can remain in the building while the renovation occurs. ecoworks also generates a high ROI for investors.   

Through these and other investments, JLL aims to drive innovation, promote sustainability and address the challenges of climate change in the built environment. In the coming months and years JLL Spark will make new sustainability investments that will provide further innovation for our clients and enhance our ability to help our clients decarbonize their portfolios. By leveraging technology, data, and industry expertise, JLL is actively helping clients decarbonize their buildings, reduce energy consumption, and achieve their sustainability goals. 

Written by Sean Wright, Investment Principal at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

We recently explored the real estate industry in Asia Pacific and why it offers vast potential for Proptech solutions. Now we look at the some of the PropTech adoption trends and why there seems to be a lower volume of VC investment compared to the US and Europe. JLL’s Global Real Estate Outlook 2024 highlights several global trends where Asia Pacific differs from other regions, such as sustainability, technology consumption, and PropTech investment. 

Sustainability  

In Asia Pacific, there is a growing focus on low-carbon office space. This emphasis on sustainability has resulted in demand for 4.6 million sq ft of low-carbon offices, which is slightly lower than the U.S. demand of 7.1 million sq ft. Interestingly, the supply of low-carbon offices in the Asia Pacific region has already met 41% of this demand, demonstrating a significant commitment to sustainable practices. In comparison, the United States has only managed to fulfill 25% of its demand for low-carbon office space. 

This variance in unmet demand could be due to stricter sustainability standards in many countries across the Asia Pacific region as noted in JLL’s recent real estate outlook. These policies have fostered a higher level of integration of sustainability measures into new building developments. Rapid urbanization in many Asia Pacific cities has provided an opportunity to integrate sustainability from the ground up, resulting in a higher adoption rate of technologies that enable more sustainable building operations. In many cases, large established developers and technology firms are building new technology solutions themselves, resulting in fewer venture capital investment opportunities. 

Technology appetite 

The 2023 JLL technology survey features questions on the appetite for technology spend and the confidence in technology as a competitive advantage. The results showed that these figures in Asia Pacific are very close to the U.S. results. Some results are even higher than the U.S. – for example 100% of occupiers surveyed in both Japan and India believed that technology would provide competitive advantage. Similarly, in all Asia Pacific countries surveyed, over 90% agreed they were willing to pay a premium for tech-enabled spaces. This can be attributed to post-pandemic return to office rates being significantly higher in Asia Pacific with an average of 85%, compared to 75% in Europe and 55% in the U.S. 

PropTech investment landscape 

The U.S. has a large volume of investment and venture capital firms, and an accompanying ecosystem that thrives on the network effect. These ecosystems also exist in Asia Pacific, but there are many more of them, spread across many different countries, and so more dispersed without a single lens across the whole region. 

Investing in Asia Pacific is also more fragmented. For an investor to assess the potential of a startup in any country, there is a layer of knowledge required to conduct effective due diligence, including an understanding of: 

• Product-market fit against local market expectations and business norms 
• Local competitive landscape 
• Cultural nuances that will influence adoption 

This results in what some would see as a disjointed investment market, as well as a localised success rate. Any given product category could have numerous market leaders across multiple countries and even within the regions of that country. There may be an identical product in the country next door, but they are not competitors, because they are tailored to the local market and culture. 

Despite the hurdle of navigating cultural and country nuances, venture capital investments are gaining traction in the APAC region. Local and international VCs, including the JLL Spark investor team, are taking notice of the tech appetite in the region, partially fuelled by the global responsibility of lowering the industry’s carbon footprint. 

At JLL Spark, we leverage the local knowledge of our JLL business teams on the ground. We have subject matter experts who run local innovation teams and can test local solutions even before they are ready for investment. There is a solid stream of new products coming through and plenty of opportunity for new successful PropTech investment in Asia Pacific; this is the tip of the iceberg! 

Written by Carolyn Trickett, Growth Principal at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

Introduction 

Welcome to Spark X. Founded in 2021, Spark X is the embodiment of innovation and strategic growth within the JLL family. Where JLL Spark Global Ventures excels in identifying and investing in groundbreaking startups, Spark X takes a hands-on approach, building transformative solutions from the ground up. Through our unique focus on solving big problems, building superior solutions, and targeting expansive growth markets, Spark X is not just about investing in the future; it’s about building the future. 

How Spark X works: Criteria for innovation 

At Spark X, our methodology is grounded in three fundamental criteria: identifying substantial opportunities or problems for JLL, crafting solutions that surpass market offerings, and ensuring these solutions have the potential to grow into billion-dollar companies. Spark X is best suited for technology surface areas adjacent to the core business where we see the potential for both product value and equity value. This approach is exemplified by the inception story of Amazon Web Services (AWS), a venture that transformed a significant internal challenge into a global powerhouse, contributing to half of Amazon’s trillion-dollar valuation. Similarly, Spark X seeks to uncover and capitalize on such transformative opportunities within and beyond the realm of real estate. 

Our process: Identifying and building solutions 

Our journey begins with deep dives into JLL’s operations and businesses, identifying areas ripe for innovation, from streamlining processes to tapping into underserved markets. Spark X explores, validates, and builds from scratch. This hands-on approach allows us to address JLL’s challenges directly. 

The Spark X team: Builders at heart 

Our team is our backbone — a diverse mix of founders, product engineers, and market specialists with proven track records in creating and scaling successful ventures. Our team’s expertise spans FinTech, SaaS, and consumer technology, ensuring a rich foundation for fostering innovation and driving growth. 

Maximizing vendor relationships and building for scale 

Leveraging JLL’s extensive vendor network and focusing on operational efficiencies and employee satisfaction, Spark X has initiated ventures like Mesa and Caltana to enhance vendor payment processes, and Navable and Tangelo.ai to improve employee onboarding and retention. These initiatives underscore our commitment to enhancing the ecosystem for both JLL and its partners. 

Funding: A strategic approach 

Spark X benefits from the agility of a startup with the backing of a substantial investment pool funded by JLL. This unique position allows us to support our ventures with strategic investments, fueling ambitious projects without tapping into JLL’s core operational resources. 

Looking ahead: Areas for future exploration 

Moving forward, Spark X is keenly focused on exploring areas where technology can dramatically increase productivity, enhance operational efficiency, and drive significant cost savings. By developing platforms that not only improve but also expand access to JLL’s services, we aim to create a more efficient, cost-effective, and forward-thinking ecosystem. 

Conclusion 

Spark X embodies JLL’s commitment to innovation, leveraging the corporation’s resources, market presence, and industry insights to build ventures that address today’s challenges and tomorrow’s opportunities. As we continue to grow and evolve, Spark X is not just creating companies; we are setting the stage for the next wave of industry leaders, ensuring they are well-equipped to transform the commercial real estate landscape and beyond. 

Written by Dave Feller and Leonard Speiser, Partners at Spark X

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

One way of thinking about a large corporation is that it’s a startup that became successful. That’s obvious for, say, Google or Meta, but also true for the majority of companies out there. 

But even as a ‘successful startup’, corporations are radically different from the original startup back in the day. Profit and revenue are the drivers of how the business thinks about itself. The company is likely public and has shareholders to look after. And the level of bureaucracy that has accreted around the products provided is something a founder might shudder at. 

So, sourcing new innovation is a non-trivial task, and a main driver for why a successful corporation might take on such an ‘unnatural act’ and launch a CVC. But, as we have explored in part 1, The goal of CVC, and part 2, Achieving financial and strategic returns, of our CVC blog post series, there is a lot of work to be done to make this work well. 

Correctly balancing the needs of employees, shareholders and investors is critical to successfully run a CVC. In order to get it right, you need top level support , aligned processes, investment skills, allocated capital and time, of course, but you have to start with metrics. 

And by metrics I mean: what are the objectives of your investment program and how will you measure against them? Saying you are ‘strategic’ is only the first step – how you determine the level of strategic value delivered is paramount to delivering the business case for the CVC mission. 

And for the rest: 

• • Top level support and understanding: From the Board on down, does the organization understand the mission, know how to measure it, and support the strategic goals you are trying to solve? Buy-in is critical to achieving your goals as the rest of the organization needs to be motivated to help. 

• • Process: Do you have an agreed deal process? For example, can you move quickly enough, have market standard terms and help your portfolio companies grow as startups, as well as deliver on the strategic promise that makes a CVC attractive to a revenue-hungry startup? If not, why would a startup take your investment over anyone else (like a financial VC, for example)? 

• • Investment skills: Can you build the ability to find, invest and manage good startups that add strategic value and return financial success, while avoiding adverse selection issues? The ability to hire and retain talent is one of the hardest areas for CVCs to work with, given the constraints of the corporate parent; and also leads to other factors such as the structure and size of incentives. 

• • Allocated capital: What is the structure of the capital allocated for investments? Balance sheet, single LP fund, multi-LP fund etc. The permanence of the structure and the incentives that can be layered on (‘carry’, for example) have a large impact on how prospective employees and startups will view you, and the attractiveness of doing business with you. 

• • And finally, time: Investments in early-stage companies take many years to mature, so the financial benefits could be seven to ten years out. (Worse, the failed investments tend to fail before the good investments pan out, pushing you into the trough of the J curve). Likewise, these companies may not be ready to engage with a large multinational organization like you, so the strategic benefits might not flow for one to two years after an investment.  

So, the benefits are uncertain and far off, and meanwhile the senior management team that approved the CVC’s formation may have turned over before real proof points arrive… All this to say, a long term commitment is required to make it through to the promised land where, if you have been investing well and regularly, you will start to benefit from a stellar reputation (bringing you better deals), demonstrable strategic value (backed by metrics), customers that are happy with the innovation that you bring them, and financial returns that reliably arrive, making even the most hardened CFO crack a smile. 

No one said it would be easy, but getting it right has a huge upside! 

Written by Raj Singh, Managing Partner at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

Venture capital investments in PropTech have been on the rise globally, with increasing deal volumes and funding amounts in all regions. 

We recently featured a blog post on the PropTech landscape in Europe; in this article we now start to explore the Asia Pacific region, how it differs from other parts of the world and how it offers vast potential for PropTech solutions. 

The Asia Pacific region presents a massive market opportunity for PropTech due to its population, rapid urbanization, and increased demand for real estate services. With over 48 countries and a population of over 4.6 billion, there is no question that Asia Pacific is a huge market opportunity. 

According to JLL Research, the commercial buildings in the Asia Pacific region have a total market value exceeding $12 trillion, encompassing more than 260,000 individual properties valued over $10 million each. This presents an intriguing contrast when compared to the United States, which boasts 900,000 buildings with a total market value of approximately $13.5 trillion. 

According to the 2023 Proptech Venture Capital Report by CRETI, the analysis of the top 10 most active PropTech venture markets also revealed some interesting results. The US was by far the most active market, accounting for 56% of the total deal count with 410 deals. India secured the 3rd position with 7% of the deals, while China ranked 8th with 3% and South Korea came in at 9th place with 2%. Collectively, these three Asia Pacific countries represented only 12% of the deal count, while Canada, the UK, and other European markets accounted for the remaining 31%. 

So, with this many people and so much opportunity, why is there a lower volume of PropTech venture capital investment compared to the US and Europe, and what does this mean in terms of PropTech adoption? 

It is not easy to tell the story of PropTech adoption in Asia without first exploring the region itself and how the real estate industry operates in various countries, including major economies like China, Japan, India, Australia, South Korea, and Singapore, as well as smaller nations in Southeast Asia, Oceania, and parts of the Middle East. 

Specifically, the real estate industry in the Asia Pacific region stands out from other regions in several ways: 

• • Significant and rapid economic growth and increased urbanization over the past few decades has led to a rising middle class, which has spurred sharp demand for residential, commercial, and industrial real estate. 
• • Asia Pacific is home to more than half of the world’s population, with many extremely densely populated cities, leading to the rapid development of mega-cities and the need for sustainable urban planning.  
• • The Asia Pacific real estate market offers a wide range of investment opportunities, including emerging markets like China, India, and Vietnam, as well as more established markets like Japan, Australia, and Singapore. 
• • Different countries have different rules and regulations regarding property ownership, foreign investments, taxation, and land use. 

Understanding the region’s rich tapestry of cultural nuances is essential for business success, as it impacts design preferences, market behaviors, and business practices. Building relationships and adapting to local customs are necessary to facilitate adoption of PropTech in the region, determining which solutions will be successful in which markets. For example, in many of the less developed countries, high availability of a low-cost labour force reduces the urgency to seek technology solutions for labor optimisation and automation of manual tasks. Another example is manufacturing costs. Imported hardware-based solutions face fierce cost competition against locally manufactured and supported solutions.  

These challenges sit alongside big opportunities, however. The enormous volume of construction and urbanisation means that JLL Spark products like OpenSpace have been deployed in multiple Asia Pacific countries, enabling remote monitoring and inspection of development sites at large scale. 

JLL Spark offers PropTech startups valuable access to JLL’s vast industry network of staff and clients. This is especially true in Asia Pacific, where JLL operates in 16 regions with over 46,000 staff – almost half our employee base. This gives us deep and broad understanding of the real estate industry across the region and positions us well to identify the best investment opportunities in the market. 

Written by Carolyn Trickett, Growth Principal at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

One of the key benefits of securing an investment with JLL Spark Global Ventures is the opportunity to be part of a portfolio of startups with the potential for representation and referrals to JLL internal divisions, JLL clients, and other direct customers. This collaboration is facilitated through the coordination between JLL Spark and the JLL Technologies Partnerships & Alliances (‘Alliances’) team. By leveraging Spark and harnessing the power of Alliances, startups can propel their business forward, gaining access to potential growth, global market reach, and lucrative reseller and referral agreements with JLL. This enables opportunities beyond mere capital investment.  

JLL Spark, the corporate venture capital arm of JLL, is dedicated to empowering innovative PropTech founders. Since 2017, the fund has invested over $390 million in more than 50 startups spearheading real estate transformation across various sectors. By combining the strengths of the startup world with JLL’s profound history in the real estate industry, JLL Spark provides distinct advantages that set ambitious entrepreneurs on the path to success.  

Partnering with JLL Spark grants you access to JLL’s robust global network and extensive distribution channels. With a presence in 80+ countries, JLL’s expansive reach and long-established relationships open doors to extended markets and emerging opportunities. Accessing our worldwide client base, industry expertise, and market insights, offers the necessary ecosystem to rapidly scale your business and achieve accelerated revenue growth. Together, we will propel your startup’s business expansion plans.  

JLL Spark and Alliances recognize the critical importance of market validation for your startup’s success. By working alongside Alliances, we can evaluate the fit between your solution and the needs of JLL’s clients, determining the best path to unlocking additional revenue. Our rigorous vetting process ensures that only startups poised for success proceed, (and for those not yet ready, Spark’s growth team is there to assist). Equipped with JLL’s strategic support, marketing assets, and sales enablement, your company will have the opportunity to engage with both JLL’s internal business lines and its clients. Our goal is to support your startup from the time of investment; through growth, and ultimately, into an established market leader.  

It is through structured reseller or referral agreements negotiated with Alliances that your startup gains direct access to JLL’s extensive client base and benefits from our established credibility and reputation. We will guide you through a mature and detailed go-to-market process, ensuring thoughtful integration of your product or service into JLL’s commercial selling organization. This approach offers an opportunity to expand your customer base and revenue streams while strengthening your startup’s brand.  

As PropTech entrepreneurs, you develop solutions with the power to positively impact the commercial real estate world. At JLL Spark, we invest not only in your growth but also in your development through guidance, mentorship, and valuable resources meticulously tailored for success. Become part of a flourishing community consisting of other market-leading startups, industry experts, and forward-thinking investors, and help shape the future of PropTech.

Written by Bill Schulze, VP, Partnerships & Alliances at JLL Technologies

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

As a strategic corporate venture capital firm, JLL Spark Global Ventures drives value to JLL, our clients, and our startups through the match-making of cutting-edge new technologies. Spark’s main goal is to align our investments with the strategic priorities of JLL and our clients. To achieve this, we engage in in-depth discussions with all levels of the organizations to ensure that new technology investments can (1) improve JLL’s internal efficiencies to help save costs or streamline processes, (2) address client challenges, (3) disrupt existing business practices, or (4) introduce new areas of business for JLL. In all four scenarios, our portfolio companies collaborate with the business in some capacity over time. 

As a result of our strategy, we also help our portfolio companies prioritize product requirements through delivering client insights, which also helps them improve their selling processes, client support, and marketing motions. It can also potentially lead to commercial sales arrangements. The level of support Spark provides to our portfolio companies depends on factors such as their alignment with JLL and client priorities, and the maturity of their product. 

As an example, in 2018, Spark invested in VergeSense, a company that developed a spatial analytics platform for real-time data on building occupancy and utilization. The company worked closely with a Spark Growth Principal to help them navigate through the JLL organization and deliver insight, distribution, and revenue through JLL and our clients. Extensive discussions with the sales team revealed that clients were seeking a technology solution to better understand space utilization for return to office strategies and portfolio rationalization. The Spark team worked very closely with the business to establish a reseller agreement with VergeSense, integrate their technology solution into JLL’s technology stack, provide support for the sales enablement process, and ensure effective training for the sales team on the solution. The outcome was a successful partnership between JLL and VergeSense, effectively addressing a client’s need and driving revenue growth for the portfolio company. 

Another example of how Spark drives value to our portfolio companies, is the startup qbiq, an AI-powered test fit and space visualization solution. This technology supports JLL’s internal needs by providing brokers with powerful tools that enhance their ability to close deals through improved visualization of spaces for clients. JLL signed a license agreement with qbiq, underwent product training, and established an internal process for distributing the product to brokers. Since implementation, the solution’s usage among brokers has grown exponentially due to positive client feedback. As a result, JLL and qbiq have formed a strong partnership to improve internal processes, and other JLL business lines are now exploring additional use cases with the company. 

Although different use cases and end-users, both VergeSense and qbiq are examples of how Spark helps our startups cross the chasm. This is an area critical to every startup’s success. The Spark team collaborates closely with key internal stakeholders and our entrepreneurs to help mature the products until they reach mainstream commercialization, which drives sales and revenue growth.  

As a corporate venture capital firm, it is challenging to drive strategic value for the business. However, through collaboration with executive leaders at JLL from each business line to understand their strategic priorities, to working with startups to understand and align their vision, we seek to maximize strategic impact using Spark portfolio company technologies. This allows us to work closely with our portfolio companies to deliver insights, distribution, and revenue, promoting growth and maturity. And it’s fun!  

Written by Danny Klein, VP of Innovation at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

Ajey Kaushal, Senior Investment Associate 

Given multiple geopolitical conflicts and major elections in key countries (USA, Taiwan, EU, Russia, India, UK, to name a few), 2024 will remain an unpredictable year for interest rates. However, the cost pressure continues to build for owners of lower-demand assets (i.e. urban office), and we will finally see meaningful asset transactions begin to hit the market ~Q3 onwards. 

Sustainability will continue to be a focal point for federal and global governing bodies, and we will see more legislation aimed at both asset owners and corporations to reduce their footprints. As a result, there will be increased adoption of technologies geared to actively reduce and eliminate carbon emissions (not just measure and monitor them). 

AI has taken the built world by storm and is creating lasting OpEx efficiencies. However, given the speed of adoption and limited expertise, we will unfortunately see increased reports of meaningful data breaches from our sector, putting the onus on owners to adopt and deploy cybersecurity technology. 

Given the volume of capital invested in and limited surface-level differentiation between new AI-powered companies, we will begin to see meaningful consolidation in the space, continuing into 2025. 

Arnaud Bouzinac, Growth Principal 

Though there are signs allowing cautious optimism as the US Federal Reserve has hinted that interest rate cuts will happen in 2024, in terms of VC investment, we can anticipate a market dynamic that will remain subdued. Investors will remain very selective about where they put their money and startups will have to manage their operations on a very tight budget and keep their cash burn to the minimum. Those not able to do so will continue to suffer or even disappear.  

The trend of corporations demanding of their employees to come back to the office more regularly (at least three days a week) will continue although there will be no return to the old 100% in office policy, leaving the future of work challenge still valid, with a big question mark on what to do with all the unused office floors / surfaces and how to make the office “commute worthy”. And there lies an opportunity for tech companies able to address this. 

In this context, we still expect startups with rapid ROI to do the best, especially if they can help reduce energy consumption and carbon emissions or generate pockets of efficiency that save hours of manual work or labor. AI will remain a hot topic in 2024 as the real estate big players will race to claim the status of leader in the field, while encouraging the development and adoption of AI-based solutions. A direct consequence from a real estate perspective will be an increased interest in data centers, as their development will accelerate, with an opportunity for tech companies servicing these assets at scale, focusing mainly on smart FM and energy efficiency optimization. 

Daniel Correa, Senior Associate 

After a year of subdued CRE transaction volumes due to rising interest rates and turbulent market conditions, I foresee a major opportunity for distressed asset sales sometime in 2024. I also expect a new generation of brokers and dealmakers that emerge victorious from this recovery by seriously embracing technology as a competitive advantage. 

There will be a heightened focus on sustainability in the Commercial Real Estate (CRE) market. More buildings will begin to adhere to green building standards (like Local Law 97 in NYC) by incorporating renewable energy technologies or undergoing sustainable retrofits. This will be driven by regulatory mandates and increased tenant demand for sustainable spaces. 

Growth of ecommerce will continue to propel demand for warehouses and distribution centers. The explosion of online ordering and consumer expectations for fast delivery will push companies to establish a physical presence in multiple locations, increasing demand for industrial real estate. Geo-political tensions have also highlighted the vulnerabilities of our global supply chains, which will advance the growth of scalable alternatives such as nearshoring and domestic manufacturing. This will result in a major opportunity for emerging markets like LATAM and the rural US. 

Although commercial office occupancy rates will continue to struggle, demand for best-in-class space in major markets will remain strong. This flight to quality will be indicative of the kinds of assets, services, technology, and amenities that top tier tenants are looking for. This will begin to carve out leaders in each space and further define the difference between a nice to have and must have. 

Technological integration in the property sector will likely increase. This means more functional use of AI, IoT, machine learning, digital twins, and Blockchain – not just for transactions, but for managing infrastructure, security, and real time data management. System standardization around smart building management where facilities and systems are interconnected will become more prevalent. 


Danny Klein, Vice President of Innovation 

The commercial real estate industry faced challenges last year due to high inflation and interest rates, resulting in lower transaction volume and limited investments in new technologies. However, towards the end of 2023, inflation started to decrease, along with mortgage rates, and a looser stance from the Federal Reserve. These positive developments position the CRE industry favorably for 2024. 

In 2024, there will be renewed interest from occupiers and investors to implement sustainability technologies to meet broader corporate objectives. Additionally, investors are likely to increase spending on smart building technologies to differentiate their assets with occupiers and improve occupancy rates.

While there may still be some challenges ahead, we will begin to see an improved landscape for the CRE industry. 

Laurent Grill, Partner 

When considering the incorporation of artificial intelligence (AI) across various real estate sectors over the next phase, several areas stand out where the impact of AI is expected to be significant in 2024: 

• • Property management: AI can automate and optimize property management processes, such as tenant screening, lease management, and maintenance scheduling. Machine learning algorithms can help predict rental demand and optimize pricing strategies, improving revenue potential for property owners. 
• • Asset management: AI-powered tools can analyze large datasets and provide real-time insights on asset performance, risk assessment, and portfolio optimization. This enables proactive decision-making, such as identifying underperforming assets and implementing strategies to enhance returns. 
• • Smart buildings: AI can enhance the operational efficiency and sustainability of buildings by monitoring energy usage, optimizing HVAC systems, and automating maintenance schedules. AI-enabled smart building systems can self-adjust based on occupancy patterns, reducing energy consumption and improving tenant comfort. 
• • Real estate investment analysis: AI algorithms can process extensive market data, including historical patterns, demographics, and economic indicators, to provide investors with accurate valuation models and risk assessments. This helps investors make informed decisions and optimize their investment strategies. 
• • Real estate marketplaces: AI algorithms can personalize property search experiences, recommending properties that match a buyer’s preferences, budget, and location. AI can also enable automated valuation models, reducing the time and effort required for property valuations and transactions. 

Raj Singh, Managing Partner 

Macroeconomic conditions will not significantly improve until the end of Q3 2024 which means conditions will remain challenging for PropTech startups. Deal volume, dollars invested, and exits will likely be similar to 2023 levels, possibly saved by an uptick in Q4.  

Despite (or perhaps because of) the climate, seed stage startups will still emerge, focused on delivering quantifiable RoI around asset management, energy and sustainability, financial derivatives applied to construction to smooth out supply and demand imbalances and enabling the industry to deliver against increasingly tight regulation.  

Startups enabling RE companies to maximize the use of technology through education and services will build initial market traction as the industry attempts to benefit from generative AI solutions that bring significant efficiencies (although not yet new business models) and change the competitive landscape. 

Improving conditions towards the end of the year will have a number of the larger startups prepping for exits but likely M&A rather than IPO as few of them will be able to produce revenues above $100MM. 

Sean Wright, Investment Principal 

Commercial real estate prices will continue falling in 2024 but will bottom out mid-year when central banks begin lowering interest rates. 

Sustainability will continue as the dominant PropTech theme and will garner the lion’s share of PropTech VC investment in 2024. Similarly, sustainable building upgrades will drive real estate investment. 

By the end of 2024, AI will be commonplace in PropTech, and no longer a point of differentiation. For most prime office and residential space, AI will be working in the background to improve our experience and improve efficiency. 

Sonia El-Sherif, Chief of Staff 

In light of the upcoming elections and global geopolitical shifts, there’s an escalating demand for PropTech cybersecurity startups. These startups will be crucial in protecting real estate data, reinforcing smart building systems, including access controls and IoT devices, and aligning with cybersecurity regulations.  

The Middle East, especially Saudi Arabia and the UAE, is expected to experience significant growth in ConTech and PropTech, bolstered by major giga-projects, AI innovations and sustainability efforts. Additionally, India’s rapid development in broker tech, ConTech, AI, and IoT suggests a robust pipeline of groundbreaking PropTech innovations in 2024, contributing to global advancements. 

With the surge in AI-related demands and prolonged timelines for data center development, the industry is facing a shift towards alternative energy sources. I foresee an increase in startups specializing in renewable energy solutions, supply chain optimizations, and technologies to support evolving data center infrastructures, particularly in cooling systems to manage the high-power usage of AI components. These startups will be vital in ensuring the environmental sustainability and operational efficiency of data centers, catering to the growing energy needs of the sector. 

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

Technological advancements are transforming industries at an unprecedented rate, and the real estate sector stands to benefit tremendously from this revolution. Recognizing the importance of adapting and innovating, JLL, one of the world’s leading real estate services firms, established the JLL Spark fund in 2018. JLL’s forward-thinking approach to real estate acknowledges that the industry’s future prosperity requires seamlessly integrating technology across all service lines. Staying ahead of the curve demands more than just bricks and mortar. It requires a tech-driven mindset that transcends the conventional boundaries of the industry. 

JLL Spark recognizes the importance of identifying and nurturing technological opportunities. Tech startups have increasingly focused on the real estate space, building solutions that redefine the way we view and interact with the built world. Whether it’s virtual reality for immersive property tours (qbiq), construction technology to create more efficiencies in the build process (INGENIOUS.BUILD, OpenSpace, Alice), IoT (Internet of Things) for building automation (Infogrid, VergeSense, Safehub) or applications to enhance tenant experiences (HqO, SwiftConnect), these technologies are reshaping the landscape. 

Artificial intelligence (AI) stands at the cornerstone of this transformation. AI-driven solutions hold the potential to revolutionize commercial real estate operations. Imagine a future where AI-powered algorithms optimize building energy consumption, reducing costs and environmental impact. Predictive analytics can foresee maintenance needs, preventing costly disruptions, and enhancing tenant satisfaction. JLL Spark’s investment strategy focuses on sustainability, with AI playing a crucial role in enhancing these industry efforts. There are major innovations happening in smart buildings, which, when equipped with AI systems, utilize real-time data to autonomously adjust lighting, heating, and cooling, thus promoting energy efficiency. Furthermore, AI-driven data analysis can identify opportunities for sustainable practices, from green leasing strategies to reducing carbon footprints. Despite all the excitement around this new technology, AI is only as good as the data we input. JLL’s vast data set will allow us to leverage AI tools to the fullest, which starts with our most recent internally built product, JLL GPT.

For large real estate companies like JLL, embracing technology is not an option; it’s a necessity. JLL’s investment in startups through JLL Spark fuels innovation and provides a platform for pioneering entrepreneurs to transform the industry. By supporting these startups, JLL not only benefits from their innovative solutions but also contributes to the broader ecosystem of real estate technology. The JLL Spark fund empowers JLL to be a global leader in the real estate technology sector. By proactively investing in technology and startups, JLL ensures its relevance and competitiveness in a rapidly evolving market. The creation of JLL Spark is a testament to JLL’s commitment to shaping the future of real estate through technology and innovation. Embracing AI, identifying new tech opportunities, and supporting startups are essential steps towards ensuring the industry’s relevance and sustainability. In a world where change is constant, JLL stands as a pioneer, leading the way towards a more tech-driven, efficient, and sustainable future for real estate. 

Written by Laurent Grill, Partner at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.

Hello! It’s the happiest season of all! The JLL Spark team made our 2023 predictions on January 5^th this year, and it’s time to see how we did. 

And, well, we got a lot of it right. The team thought that it would be a tough year for non-Class A office space, that climate and sustainability would be important drivers of demand, and that AI would prove to be an invaluable tool in the commercial real estate industry. How right we were, and yet, how wrong as well. We thought money would continue to pour into the PropTech space, and although we thought interest rates would be an issue, the size of the problem took us by surprise, to say the least. 

As always with VC, there is luck and timing as much as there are smarts and great business plans, teams and execution. The smartest team focused on solutions for office is likely to have had a difficult time selling into a market where (in the US certainly) ‘return to office’ largely continues to be a CEO’s dream rather than the reality. Luck plays a role when, if you raised a large round 12 months earlier and took measures to significantly cut burn, your chances of surviving 2023 and 2024 are much improved, and ‘thrive in ‘25’ is a realistic prospect. 

Here at JLL Spark, despite the gyrations of the market, we still see a fundamentally healthy ecosystem for PropTech. The reasons why owners and occupiers might adopt technology are, if anything, more obvious and numerous than ever. While not every business is in the real estate business, real estate is in every business, and ensuring you get the most from the property you use, office, industrial, multi-family and so on, is increasingly a topic of conversation at the highest levels, especially given the associated financial investments businesses have made in the sector. 

While the need for technology is clear, what is also evident is that technology alone is not sufficient to provide the benefits we are all seeking. Establishing a plan is fundamental, but it is important to recognize that successful technology adoption requires the right people and the right set-up to maximize the value that technology can bring them (something that the adoption of AI will bring home in spades). This area of HR is something we as a sector have much work to do to improve our focus and ability to attract and develop the right people in our organizations. With great technology comes great expectations, and they can only be realized if we know what we are doing… 

We as a team are always grateful to our colleagues in the JLL Technology division and the broader JLL family for their partnership, wisdom and willingness to introduce exciting new startups to JLL’s clients in search of the innovations that can make a difference. Together we can further the mission of making JLL into the premier tech enabled services provider for the industry. Happy holidays to all! 

Written by Raj Singh, Managing Partner at JLL Spark

Interested in a strategic partnership with JLL Spark? Apply for an investment here.