JLL Spark Global Ventures: Pioneering the future of real estate through innovation 

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.

Year-end reflection from JLL Spark

Hello! It’s the happiest season of all! The JLL Spark team made our 2023 predictions on January 5th 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.

CVC series, part 4: JLL Spark brings more than money

It’s no secret that the best startups get to pick their investors. Rather than desperately seeking venture money, they have multiple offers in every funding round. At JLL Spark Global Ventures, we invest in promising startups that are revolutionizing the commercial real estate industry, and we want to invest in the very best of this group. So, if you’re one of these best-in-class startups, why should you choose JLL Spark as your partner? The answer is simple; we offer much more than money. 

But first, let’s talk about money. We invest our money just like any other proper venture capital fund. We seek the best terms we can get, while finding a balance between our needs and the entrepreneurs’ needs. There may be cheaper money out there, but it’s never as valuable as ours, because our money brings so many additional benefits. 

Those benefits start with industry knowledge. JLL is one of the largest commercial real estate companies in the world. With an employee base of over 100,000, JLL generates $20 billion in annual sales from 300 offices in 80 countries. We serve the world’s largest real estate owners and occupiers. Furthermore, our investment management division, LaSalle, has $80 billion in AUM. We bring the knowledge of this organization to every investment and provide strategic insights that few others can bring. 

Additionally, we bring distribution. At JLL Spark, we drive revenue to startups in the JLL Spark portfolio by connecting the startups to our customer base of the world’s largest real estate owners and occupiers, and by driving internal use at JLL and LaSalle. At JLL Spark, we have a dedicated growth team whose main focus is to ensure our portfolio companies grow faster. Our growth principals will become your trusted advisors, constantly bringing you new sales opportunities, and helping hone your marketing activities. 

Lastly, we bring powerful branding. Having JLL Spark as a partner in your cap table sends a tremendous signal to the market that you have been vetted by and work with the best in the industry. Our portfolio companies regularly use the JLL logo on their websites and in their pitch decks, and JLL is often called upon by our portfolio companies to serve as a reference for future customers. We gladly take these calls. 

One more thing to note is that at JLL Spark, we are always on the side of the entrepreneur. Although we are part of JLL, we are set up as a proper fund, and hence, we share the same goal with the entrepreneur to maximize enterprise value. We will never ask for commercial exclusivity, a put/call structure, a right of first refusal on a sale, or engage in any other rent-seeking behavior that would in any way diminish the value of your business. We want you to make the most money possible, because when you make the most money possible, so do we. 

If you are a top entrepreneur revolutionizing the commercial real estate market, and we haven’t yet spoken, please be in touch. We offer much more than money, namely: industry knowledge, distribution, and branding, and our money comes with zero corporate baggage. We look forward to connecting with you. 

Written by Sean Wright, Investment Principal at JLL Spark based in Frankfurt, Germany.

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

American vs. European PropTech investment 

The rise of property technology, or PropTech, is unquestionably a global driving force in the real estate market. While the fundamental drivers of investment and adoption are similar everywhere, in this post we would like to offer a comparative analysis of how PropTech capital is deployed in Europe (European Union or EU + UK) and the United States. And there are some noticeable differences. 

As mentioned, on one hand we see similarities in the global factors and challenges that accelerate the growth of PropTech such as: 

  • – Shortage of staff and rising costs of labor 
  • – Rising interest rates and inflation 
  • – Uncertainty around the future of the office 
  • – Climate change and the need for more sustainable buildings 

However, out of the $19.8 billion invested in PropTech globally in 2022, the US still accumulated the lion’s share. According to a 2022 CRETI survey, the US amassed 43% of the total volume of investments with over 650 deals, way ahead of the EU at 250 investments, and the UK with about 130 investments. To mitigate this, the European venture capital (VC) market is catching up as it grew 6x over the last decade (1.5 times the US rate growth – source Sifted). 

So why does Europe, which is a much larger demographic market than the US at 742 million vs. 332 million people, receive significantly less investment and generate less deals? This can be explained in part by the fractioned nature of the old continent. Indeed, different languages, regulatory systems, and the lack of European-wide incentives for startups tend to create a more local and country focused mindset for entrepreneurs. This translates to smaller scale development plans, attracting less capital and attention from VCs.  

It’s worth mentioning that within the region, the UK sits in a unique situation. As proportionally to the size of its market (67 million people), the UK attracts a lot more capital for PropTech than the rest of the continent. Additionally, UK landlords are generally more tech savvy and adventurous than their EU counterparts, which is evident by the fact that a lot of UK startups very quickly look at the US for expansion due to similar legal systems and language compatibility, creating larger opportunities as these companies scale. At the same time, the UK often is the priority of expanding US tech companies and VCs, offering to the country an earlier and privileged exposure to cutting edge ideas.  

On the other side of the pond, US startups have a much bigger and uniform national market to scale upon, which requires larger capital injections to secure growth opportunities. The US-based VC ecosystem is more mature and developed, meaning more competition among investors, higher valuations, and, therefore, larger funding rounds. In addition to the presence of more PropTech focused VCs, other factors that explain the larger US volume include:

  • – A generally higher appetite for risk
  • – Higher operating costs for business (especially in tech hubs such as Silicon Valley)
  • – A more robust IPO and M&A market, providing better exit perspectives

European PropTech startups are subject to a more stringent regulatory environment than their North American counterparts on ESG standards, data privacy, and emerging regulations on AI, which can hinder product development and adoption. In some cases, however, this can have an accelerator effect for technology. In sectors like the energy transition, the French, German, and UK decrees in particular compel real estate owners and occupiers to drastically reduce their CO2 emissions. The circular economy – minimizing waste, promoting recycling, reuse of materials – also sees the creation and investment in an interesting new ecosystem of companies.  

Could it be that the European startups might actually lead globally on these pressing subjects? Only time will tell. 

Written by Arnaud Bouzinac, Growth Principal at JLL Spark based in Paris.

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

JLL Spark’s CVC series, part 3: What sets us apart

In the world of venture capitalism, corporate venture capital funds (CVCs) play a pivotal role in driving innovation and nurturing groundbreaking startups. Among them, JLL Spark Global Ventures stands out for our unique approach to investing in PropTech and built world technology. With a strong focus on commercial real estate, we strive to make a profound impact on the future of the built world. What are the distinct advantages and principles that set JLL Spark apart from other CVCs? How do JLL and our portfolio companies each benefit from this strategic partnership? Let’s dive in…  

  1. Aligning Business Lines and Cultivating Valuable Partnerships

JLL Spark differentiates itself from other traditional capital by ensuring that our investments align with our core business lines. By partnering with startups that offer innovative solutions, we foster mutually beneficial relationships that create value for both parties. However, we acknowledge that emerging technologies often outpace our ability to deploy them. This recognition drives us to actively pursue innovative companies that surpass our existing capabilities, propelling us towards the forefront of the built world’s cutting-edge advancements. 

  1. Embracing Independence and Agility

Unlike many CVCs, JLL Spark operates through a separate venture group that is solely backed by JLL. This freedom allows us to explore and invest in technologies that directly support our core business and client needs while focusing on mutual success. By maintaining a separate and nimble investment committee, we can assess deals efficiently and effectively. This structure ensures that our decision-making process remains agile and more closely resembles that of traditional venture capital firms, leading to better outcomes for our portfolio, both strategically and financially. 

  1. Long-Term Commitment and Support

With dedicated capital, JLL Spark takes an active role in building a robust portfolio. We are committed to supporting our portfolio companies, not only with initial investments, but also with follow-on capital, fostering their long-term growth. Unlike many other firms in our field, we often take lead positions in deals and fill board positions. We provide ongoing support, extending our strategic relationship beyond JLL to be the best investment partner possible. By positioning ourselves as strong minority partners, we help startups scale into multi-billion-dollar businesses, further enhancing the impact of our investments. 

  1. Driving Value while Achieving Financial Success

At JLL Spark, success is measured not only by financial returns, but also by the strategic value we bring to JLL and our clients. While this presents a larger challenge, it creates a win-win scenario for both startups and our organization. By leveraging our expertise and resources, we bridge the gap between innovative technology and real-world implementations, setting the stage for a sustainable future built on innovation. 

JLL Spark has established itself as a prominent force in the built world technology landscape. Our unique structure, independent venture group, long-term commitment, and focus on strategic value position us as a catalyst for innovation within JLL and the greater real estate industry.  With an unwavering dedication to our startup founders and a commitment to creating meaningful change, we continue to redefine what it means to be an innovator in the real estate space. 

Written by Laurent Grill, Partner at JLL Spark

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

JLL’s Global Technology Survey: JLL Spark investments align with client and investor tech focus 

In the face of challenges within the VC market and the persistent uncertainties of the broader economic landscape affecting the commercial real estate sector, technology remains a paramount focus for investors, landlords, and occupiers. According to JLL’s latest Global Technology Survey, 85% of companies are increasing their technology budgets despite a difficult operating environment. This unwavering emphasis on technology can be attributed to several crucial reasons. 

The real estate industry is currently experiencing a significant digital transformation as technology revolutionizes how we live and work. Technology has become a catalyst for creating strategic value and facilitating new business models. It enhances decision-making capabilities and boosts productivity. Surprisingly, even in a difficult operating environment, more than 80% of companies are planning to allocate more of their budget to technology, according to the report. This trend is driven by the recognition that technology provides a competitive edge and improves tenant retention rates. In fact, 91% of occupiers are willing to pay extra for spaces that incorporate technology. 

JLL Spark’s investment focus aligns perfectly with the technology requirements of JLL’s clients.  

For occupiers, although the immediate focus is on supporting hybrid and remote working and attracting and retaining talent, there is a notable shift in sight. In the coming three years, occupiers will prioritize areas that enable real estate functions to serve a broader range of business objectives. While the return to office remains significant in the post-pandemic landscape, it is now seen as a fundamental expectation rather than a long-term driver of technology use. Occupiers are now directing their attention towards tools that facilitate a transition from reactive to predictive decision-making, such as lease management tools and insights dashboards. They are also seeking technological support to achieve strategic goals, such as emissions management. As illustrated in the chart below, JLL Spark has already made several investments that cater to the present and anticipated requirements of our occupier clients.

Technology is also becoming increasingly important for investors as they seek to address crucial business requirements such as design, fundraising, and asset valuation. Similar to occupiers, there is a significant shift from cost reduction to value creation among investors. They are now prioritizing the improvement of asset selection and management to enhance operating income, minimize vacancies, and explore new revenue streams. The priorities of investors reflect a more operationally intensive approach to managing assets, emphasizing the need for comprehensive building management solutions that ensure efficient operations and minimize environmental impacts. As investors move towards the next stage of technology adoption, they are focusing on digital infrastructure, including sensors, IoT systems, and converged building networks, as well as building automation, covering energy management, and sustainability reporting. The table below shows the investments that JLL Spark and the JLL Technologies division has made that address the current and future needs of our investor clients. In addition, JLL has invested in other technologies like Building Engines and Skyline/Horizon that have not been mentioned.

Over the years, JLL Spark has actively invested in ConTech, FinTech, smart buildings, and future of work, resulting in a robust portfolio of technology solutions that deliver significant benefits to JLL and our clients. As a strategic venture capital investor, JLL Spark remains attuned not only to the trends and developments in the PropTech industry but also to the unique business challenges, technology needs, and investment preferences of our clients. This deep understanding enables JLL Spark to continuously invest in the convergence of cutting-edge technologies and client demands, securing the perfect harmony between innovation and client-centric solutions. 

Written by Danny Klein, VP of Innovation at JLL Spark

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

JLL Spark’s CVC series, part 2: Achieving financial and strategic returns

In a recent blog post, JLL Spark introduced our corporate venture capital (CVC) series, and discussed why corporations establish CVC units. In the second part of this series, we’ll talk about how to structure a CVC unit to achieve maximum value for the parent corporation (Parent).   

CVC units are created to deliver the dual mandate of financial returns and strategic returns by investing in startups and driving outside-in innovation through collaborations with the business units (BUs). In theory, it seems easy to achieve the dual mandate, but in practice many CVCs fall short of one or both goals. This is usually because incentives, responsibilities, and resources are not correctly allocated between the Parent, the CVC unit, and the BUs.   

The problems start for most corporations when they focus their investments purely on the “strategic” side, meaning the investments focus on collaborations, rather than the financial aspects of investment. Strategic CVC units tend to be driven by the goals of the BUs, and often require a BU sponsor and a collaboration to make an investment. But since the BUs don’t know how to make venture capital (VC) investments, collaborations take time (more time than the best startups need to raise money) and resources to bear fruit, and the VC team is not empowered to make the best investments, strategic CVC units tend to miss a lot of good opportunities and make a lot of bad investments. Many corporations look back five or six years later and wonder why their investment track records are so poor. 

On the other side, and lower in number, are the purely financially focused CVC units. They tend to have much better investment track records than their strategic counterparts, but they often don’t foster the collaborations that are necessary to create strategic value. That’s also not ideal for the Parent.  

Fortunately, there is a solution. In the last 20 or so years since CVC has become a big thing, a clear body of evidence has emerged that supports a winning strategy to achieve the dual mandate. This strategy has been followed successfully by CVC units from top global corporations like Google, Salesforce, Siemens, Bosch, Schneider Electric, and Hitachi, just to name a few. There are a few key principles for success that need to be followed to make this winning strategy work.   

First, the CVC unit must invest like a proper venture fund. Practically, that means the ideal CVC unit will have (i) investment independence within strategically relevant business areas, (ii) a proper fund structure with dedicated funding, and (iii) a carried interest plan to incentivize the professionals to make investment profits. VC is a difficult asset class, but with this structure in place, the CVC unit will achieve solid long-term investment results. 

Secondly, the CVC and the BUs need to be incentivized to promote and achieve successful collaborations with startups. The CVC unit needs to show relevant startups to the BUs and get graded and incentivized (usually as part of bonus payments) based on the deal flow it brings to the BUs. The BUs, on the other hand, must decide on and implement collaborations, ideally with portfolio companies. Often BUs are resistant to work with startups, and that can be for many reasons such as lack of funding or lack of motivation. This is where the Parent needs to help. It is very useful for the Parent to provide funding for proof of concepts with startups which does not hit the BU’s profit and loss statement (usually this funding comes through the CVC budget), and secondly to give financial incentives to the BU managers to achieve successful collaborations. When those tools are in place, the CVC and BUs are aligned and properly incentivized, and wonderful collaborations will happen.   

In conclusion, there is a relatively simple recipe to follow to achieve the dual mandate and maximize value for the Parent from its CVC activity. Below we lay out the principles for success in CVC: 

Written by Sean Wright, Investment Principal at JLL Spark

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

Founder Profile: Dealpath’s Mike Sroka and the Next Generation of Real Estate Investment Performance

An industry long underserved by software and technology and one of the last to garner the full benefits of digitization, Dealpath, a JLL Spark portfolio company, is transforming how real estate investment managers maximize their investment pipelines and portfolio performance. As it turns out, it takes a specific skill set to develop a solution that transforms a traditionally stubborn industry, especially in the complex arena of financial technology (FinTech). 

CEO and Co-Founder of Dealpath, Mike Sroka began his career in real estate finance, and quickly learned how large-scale private equity firms manage their data. He later went on to join a hedge fund, where he was pulled into the world of software development and eventually spent nearly two decades developing venture backed software companies. Mike’s experience in finance, real estate, and software helped him identify gaps and opportunities for efficiency within commercial real estate (CRE), which led to the development of deal management software to address two fundamental challenges: 

  1. Decentralized data 
  2. Specialized and complex workflows and collaboration needs.  

In March 2014, Mike co-founded Dealpath alongside Andy Lee and Kenter Wu. Their goal was to build a differentiated software and data platform that would revolutionize how commercial real estate would transact digitally. The result: a single source of truth for the industry, supporting institutional investors throughout the entire lifecycle, from pipeline to portfolio management, and enabling workflows that operate with speed and precision through easy access to data and flexible configurability. 

Dealpath has continued to optimize their platform to better serve clients and address new challenges within the rapidly changing CRE landscape. As artificial intelligence continues to dominate headlines and disrupt new verticals, Mike and the Dealpath team are committed to leveraging the full potential of machine learning across its robust product roadmap to thoughtfully provide resources and enhanced capabilities. They are also exploring how the platform can be capitalized to further customer sustainability initiatives, providing an ideal space that services climate data and drives corporate social responsibility endeavors forward. 

“The future of real estate investment management and capital markets is more programmatic portfolio management and transaction execution, and it starts with organizing and structuring all of the data that these firms have access to, visualizing it so that they can be more data driven in their decision making, and automating steps along the way,” says Mike.  

JLL Spark’s early investment in Dealpath has proven synergistic over the years with JLL’s broader vision to drive technology across real estate finance. Today, Dealpath’s platform is deployed across LaSalle Investment Management’s Equity and Debt teams for pipeline management, acquisitions, and dispositions among other use cases. As a leading provider of real estate services, partnership with forward thinking entrepreneurs has continued to enable competitive advantages across our business. 

Written by Daniel Correa, Senior Associate at JLL Spark

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

Proda’s AI power: Increasing the value of data for real estate markets

Artificial Intelligence-powered tools have been under the spotlight since the launch of Chat GPT in November 2022. Real estate professionals across the value chain are trying to figure out which AI applications will have the biggest impact on their efficiency and performance.   

They certainly are well advised to do so. Data and the AI applications it will feed are the future of real estate decision making and management processes. Multiple AI applications already exist in the built world like the visualization of construction sites, HVAC management, floor plan optimization, and occupancy monitoring to name a few.   

One area where AI will be a game changer is the enablement of real estate data at massive scale which today is mostly unstructured and comes in endless different formats due to the heterogeneity of assets, asset classes, countries, strategies, and fragmentation of the industry.  

FinTech applications will particularly benefit from the increased access to qualitative and large data sets generated by AI models. In our last blog post, we highlighted FinTech solutions – a core investment theme for JLL Spark – that enable asset managers to operate more efficiently with reduced costs. For example, Proda is a perfect illustration of how this will play out in the specific case of rent roll data.  

The cornerstone of real estate financial models, rent roll data is managed and shared by all players in the industry. The lack of standardization forces each of them to mobilize expensive resources or to pay data management suppliers to capture and check the data before they can utilize it. This analog process limits both the accuracy and frequency of reporting and financial modeling, which, in turn, negatively impacts real estate actors’ decision-making capabilities. 

Proda has developed a machine learning-based software tool to import and quality check any rent roll data regardless of asset type, language, market, or data format. Their solution saves up to 90% of data processing time: five minutes instead of an average of one to two hours for a single asset, and one day instead of a couple of weeks for large portfolios. Imported information is transferred into an 800-point data model allowing users to enrich data, export it manually or through APIs, build reporting, and run queries or analyses leveraging AI models. 

At JLL Spark, we expect FinTech solutions like Proda to change the landscape of real estate transactions dramatically. The leading asset management firms using Proda not only gain accuracy, availability, and security of their most important data, thus allowing their team focus on valued added tasks, they are also creating an unfair competitive advantage by utilizing cutting-edge AI-enabled capabilities to obliterate the status quo.  

Technology is reshaping the commercial real estate industry, but lack of data availability and standardization has slowed down innovation. AI, and generative AI in particular, will exponentially lift this blocker and, by doing so, unlock new solutions and lead to more technology adoption.

Written by Tanguy Quero, Investment Principal at JLL Spark

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

FinTech: The pivotal role financial services and technology will play in the future of CRE

It’s all connected. Nothing could be truer when analyzing the symbiotic relationship of the financial and real estate markets. Commercial real estate (CRE), one of the most resilient asset classes in recent memory, is experiencing gale-force headwinds as steep increases in interest rates have caused widespread defaults, distributed work forces are emptying offices, and sustainability regulations are driving carbon emitting offenders’ asset values down. When compared to the maturation of the financial services industry overall, the real estate financial market has remained largely unchanged in the ways we assess, transact, optimize, and transfer the value of real estate assets. 

CRE broadly is a laggard industry compared to the rest of the economy which, at this stage in the market cycle, creates an opportunity in the form of implementation of products or strategies that are proven to increase productivity and reduce costs. The question that we at JLL Spark often ask ourselves is why it has been so difficult historically to drive Financial Technology (FinTech) or other technology adoption in CRE. The answer: lack of scarcity. Real estate investors have been profiting hand over fist in arguably the same way for the last one hundred years without the need for change. However, that was then, and this is now.  

When we think about what the future holds for CRE, technology is the lever that owners and investors can pull to deploy solutions that maximize utility and returns. At JLL Spark, FinTech is a core theme in our investment strategy. As we are already seeing in other industries with different levels of maturity, FinTech is everywhere: e-commerce offers a robust set of embedded FinTech solutions such as BNPL (buy now, pay later) to consumers, healthcare leverages FinOps (financial operations) for their complex payment flow, and even charities are creating alternative donation methods to increase fundraising conversion. With the abundance of FinTech solutions in the marketplace, we have identified what we feel are high impact, quick wins for CRE in these challenging times: 

Process Management: Technology to increase efficiency in teams by shifting their focus from day-to-day tasks to find and manage investment opportunities. An example would be our portfolio company Dealpath, a platform to manage deals throughout the lifecycle of a real estate asset, seamlessly extracting and ingesting data, saving teams hours in manual data entry. 

Transaction Automation: Solutions that automate underwriting and elements of due diligence for acquisitions, dispositions, and refinancing which create efficiencies and cost savings for all involved in each real estate transaction. For example, Roofstock (also a portfolio company) provides a single platform for high-volume and institutional investors to buy, manage, and sell properties. 

Asset Optimization: ESG/Climate impact and valuation solutions like Carbon Pathfinder and ClimaFi can help assess, procure, and finance carbon efficient retrofits or implementation of energy solutions for buildings. 

Data Collection: Tools that leverage machine learning to automatically capture and audit rent roll data provide standardization and enhancement of data collection for real estate financial models. Proda, a JLL Spark portfolio company, saves approximately 680 hours per year per employee with automatic machine learning error flagging. Another in our portfolio, Elise AI, automates laborious leasing tasks, saving agents over two hours per day. Elise’s AI-based platform helps structure data recollection throughout the sales lifecycle and increases appointment conversion by over 100%. 

As the credit markets tighten and inflation continues to run rampant, the CRE markets can weather this storm by embracing the above-mentioned FinTech solutions, allowing them to find operating efficiencies and cost savings. The real estate market may be going through a tough period, but technology will inevitably change the CRE landscape. At JLL Spark, we are actively seeking startups at the intersection of finance and CRE to steward the industry beyond the next frontier. 

Written by Javier Araujo O’Neill, Senior Investment Associate at JLL Spark

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