One For All: JLL’s New Investment Banking Approach to Brokerage

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“In an investment bank, the client comes first, the firm someone works for comes second, and the individual comes third,” Peter Riguardi said, while sipping on a Diet Coke in his office at 330 Madison Avenue. “In the real estate service industry, the client comes first, but a lot of times — especially in brokerage — the individual comes second, and the company comes third. You’re not going to survive at JLL unless you feel like JLL comes second.” 

Riguardi, chairman and president of JLL’s New York region, spoke with Commercial Observer in December, well in advance of the news that one of the firm’s star brokers, Bob Knakal, had exited the company in February. While JLL hasn’t publicly commented on the exit, sources said that Knakal’s participation in a New York Times article that focused solely on his vast collection of property maps may not have fallen in line with JLL’s new, tiered approach. 

“It’s often easy for a broker to have a me-first mindset,” said Stephen Schlegel, market director of the New York tri-state region for JLL, also speaking generally in December. “But if I’m a client, and my adviser comes to me with workplace services, capital markets, project management and all kinds of expertise under one roof, I’m better off — and that’s what enterprise thinking is. We’re trying to orient a group of people who may have historically thought about themselves first, to think about the enterprise first. It’s the single, biggest opportunity we have to separate ourselves from our competitors today.” 

Indeed, some of those competitors continue to focus on the star broker approach. Barry Gosin, CEO of rival Newmark, has touted the approach for his brokerage in recent interviews and even in a February op-ed for CO, where he said the most talented brokers should come over to his shop.

North star

The ability for JLL to differentiate itself comes at a critical junction in the market. Twenty-plus months of higher interest rates and anemic transaction volume mean that firms across the board are working harder than ever to serve — and retain — their clients. 

As Commercial Observer was going to press, JLL announced revenues of $5.8 billion for the fourth quarter of 2023, an increase of 4 percent from the third quarter. Its annual revenues remained flat, while fee revenue was down by 11 percent and cash flow fell 41 percent. 

“We’re trying to navigate the real estate headwinds like everyone else,” Riguardi said. “There’s no doubt the volumes of business are down, but we’re really impressed with our team and the amount of successes we are enjoying in the marketplace. We’re also looking at what made us successful thus far, and what we need to do to continue to be successful — particularly in a place like New York, which is very competitive, with very sophisticated competitors and clients.” 

In a bid to better serve those clients, while also staying ahead of the competition, Riguardi is prioritizing a few key aspects of the business in version 2.0 of the JLL New York office, specifically business development, data and technology. Sitting atop all aspects of the evolution is the company-wide mantra: “One JLL.” 

“Business development is a key part of most industries, but, in the commercial real estate brokerage business, the business of business development is random,” Riguardi said. “We’re putting a lot more scaffolding and accountability around it.” 

Just as in an investment bank, JLL’s professionals are now responsible for particular coverage areas, the goal being to find new clients and introduce them to the firm’s full suite of offerings. “We want to make sure that the depth of our services is being presented to as many opportunities that the market can allow us to access,” Riguardi said.

The company is also leaning into offering data-driven technology, one example of which is Building DNA, an application that evaluates and ranks office buildings in New York City on more than 70 qualities, almost like a high school report card. As office properties continue to peacock in order to win tenants, Building DNA helps owners identify a property’s weaknesses and figure out how to make those assets more attractive by, for example, adding outside space. 

“We’re going to run out of new office building space next year,” Riguardi said of 2024. “So the existing buildings are going to have to make adjustments to win business.”

As for One JLL? That comes from the firm’s own number one, CEO Christian Ulbrich. 

“We’re into this concept 1,000 percent in New York,” Riguardi said. 

One JLL means stronger business development and stronger partnerships within the firm, and it also means a blending of the old and new, with seasoned and junior brokers teaming up and working together. 

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

JLL has hired professional coaches to help with the transition.

“We’re seeing the successes already,” Riguardi said. “It also gives people an opportunity to be a part of something. We’re not only looking to do well now, we’re looking to build tomorrow’s leaders.” 

Mitch Konsker, a vice chairman at the firm, arrived at JLL 15 years ago. His specialty is agency tenant representation and national accounts, but Konsker describes himself as “a jack-of-all-trades type of broker — I do a little bit of everything.” Still, he’s not shy when it comes to knowing his weaknesses. “I try to surround myself with the best talent so that we are competitive and give our clients the best advice possible,” he said. 

“We want to transform the market to a different approach, because that’s what our clients are looking for,” Konsker added. “If you look at Morgan Stanley or any of the great investment houses, they extend the best of the best to their clients because they share intellectual capital. So, anytime that we go and promote JLL for a piece of business, or to advise a client, we’re bringing in all our services under one umbrella.” 

He likens the approach to conducting an orchestra. “One individual can’t play all the instruments, but we’re bringing all the best-of-class instruments to one level of service in order to succeed. 

“We all eat, sleep and breathe One JLL,” Konsker added. “We want to be the leaders in the industry, and so we’re breaking down the silos and the information, and fielding the best players possible.” 

Talk to me

Joseph Messina joined JLL in 2015 from Savills, but has been in the business close to 27 years now. He leads a 20-person consulting and advisory group in JLL’s New York office, partnering with brokers and clients on the occupier, investor and landlord sides to put together financial business strategies.

A move to an investment banking approach in the past 18 months has encouraged broader thinking and increased dialogue between the teams to share data, Messina said. He’s now spending increased time conversing with Christopher Peck, JLL’s capital markets office head. 

Peck joined JLL as part of its acquisition of HFF in 2019. 

“When the executive committee at HFF determined to sell the company to JLL, it was because our biggest clients were emphasizing that they wanted to have an advisory relationship that wasn’t siloed and had all the suites of service — without an ulterior motive or conflict of interest — under one roof,” Peck said. “At that time, it didn’t really exist in the market. There wasn’t a firm that was best in class in leasing, and also best in class in capital market, property management and M&A. I still think about that to this day, because this is the type of market environment that puts that to the test.”

Messina and Peck say the open flow of data between their teams is key.

“Joe will call me and say, ‘We have a tenant that’s thinking of going into X building,’ and a big part of the selection process for this tenant is who’s the landlord, what does the leverage look like, are they covering debt service, and is the building in good stead,” Peck said. “So, we’ll provide our partners with that data so they can best advise their clients on the tenant side. Conversely, our clients in the capital market side are calling saying, ‘I’ve got a 50 percent leased building, I need you to bring in a new equity partner, and new financing,’ and I’ll call Joe, and say, ‘Joe, how are you guys gonna lease this building, and at what rents?’ And verbatim the answer that I give to the client is going to be the rent data and the concession package they get from Joe and his team. If you don’t have that relationship, you’re picking data out of thin air.” 

There’s a famous Wayne Gretzky quote popular in business circles: “I skate to where the puck is going to be, not where it has been.”

“That’s what we’re trying to do,” Messina said. “We have the luxury of collecting so many different data points, and it comes down to harnessing that data, and using it as part of a negotiation in forecasting where markets will go.” 

Onward and upward

JLL’s intentional evolution aims to enhance the client experience and the firm in both up and down markets. 

While several in the industry sat on the sidelines these past 20 months waiting for the storm to pass, JLL leaned in. And some of its gumption in steaming ahead has been brewing since the last quiet period in the industry: COVID-19. 

“We expanded our space here at 330 Madison right before COVID,” Riguardi said. “There was some nervousness about that when COVID hit, but we made a conscious decision to move ahead and started our construction. I think that was the first sign that we were not going to sit on the sidelines, no matter what followed.” 

Now, “We’re ready for a quantum leap,” he added. “We have the talent, experience and clients. We’re a company that’s financially strong with a robust platform. There’s no reason why we all can’t make that leap.” 

Scott Bakula would approve. And, while there’s not as much revenue opportunity in the market as in previous years, JLL is using this period of dislocation and distress to deepen client relationships and help them navigate problems. 

“We can’t just be there when they need more space — that’s too easy,” Riguardi said. “We have to earn the right to be there when they need more space so we’re encouraging our people to stay with our clients and help them through this, even if there’s no fee to be made. We as a company are strong enough to survive through this period — and it’s an unusual period, as activity is down 30 percent.”  

Schlegel has been partners with Riguardi for 22 years now. While Riguardi is externally focused, Schlegel is the man behind the curtain, focused on the internal operations of the business. 

“We have a responsibility to deliver the best results every quarter we can,” Schlegel said. “The hardest thing to do is balance managing the cost base — how we hire people, and where we invest — which is a short-term mentality, with a longer-term mentality. If you beat the business up too badly to make short-term numbers, you compromise your ability to grow in the long term. There isn’t a public company CFO or COO anywhere that wouldn’t tell you that, and we’re smack dab in the middle of that now.” 

As another departure from the heyday of the old school brokerage world, cost cutting means that some perks have fallen by the wayside. 

“We were never as bad as our competitors in this regard, but there was a time with broker perks like cars and expense accounts, and the world just isn’t that way anymore,” Schlegel said. “The younger generation has no expectations of those things, but you’ve got to manage expectations. The enterprise’s success is better for them because they’re at a stable platform, and we can continue to invest — but people get used to things, and it’s hard to get them unused to it.”

Schlegel says another priority is ensuring that when JLL’s professionals talk to an uncertain marketplace, they’re talking in a way that resonates with top-notch research and data. “Nobody wants to hear, ‘Here’s what I think…’ They want to hear: ‘Here’s what the data shows,’ ” he said.

And Schlegel hasn’t experienced a downturn with more uncertainty than this one, he said: “Uncertainty often breeds indecision, and indecision is a challenge for a transaction-oriented business, which is, by definition, a bunch of decisions.” 

While many in the industry are optimistic about rosier conditions in 2024, Schlegel thinks there could be more pain ahead for the industry. “It’s the first time in a long time that we, as a publicly traded company, have had to face a revenue downturn. It’s forced us to be much more aware of our expense base — which is a good thing.” 

Something new 

While JLL’s New York office retains what’s good from its past business model while also embracing its next chapter, Riguardi is cognizant of what should remain. 

The older guard at JLL has transacted through cycles and myriad client requests and scenarios, from complex ground-up developments to tricky refinances to dealing with the new workplace environment and everything in between. 

“We’ve been around the decision tables with sophisticated players, and we’ve learned a lot — there’s no substitute for that, but we have to manage the old school and the new school continuously,” Riguardi said. “Both have to be nurtured and respected, and both have to be fed and given the proper resources to be successful — but both have to understand that some of the old, typical ways will not be accepted.” 

He gave the example of matching a very experienced person with a more junior person, where the senior broker calls the shots and the junior broker walks out of the room saying, “Oh my gosh, why are we doing that?” 

“The junior person has to take a step back and say, ‘OK, he or she has been very successful,’ but by the same token, the very experienced person, when the junior person says, ‘Hey, maybe we should try something different,’ needs to stop and say, ‘OK, let’s go through that together,’ ” Riguardi said.

Kristen Morgan, a senior vice president who joined JLL as an associate in 2017, said one thing that became apparent during the recent lull in the market was that the industry needed to be more creative in order to evolve. “I found my voice was more valued in the room and senior leaders were embracing different perspectives, which led to more thoughtful problem solving,” she said. “Those of us in the middle are effectively translating a new set of ideas to those that are used to things being done a certain way and who found major success doing it that way. Diversity, work life balance, technology – they are wildly important to the next generation and therefore to the companies that employ them. ”

Not that it’s always easy for a leopard to change its spots, however.

“One of the hardest things to do is to teach somebody who has been doing something a certain way — and has been very successful doing it that way — to do it differently,” Schlegel said. After all, “We have a lot of brokers who have been in the business for 30 years doing things a certain way, making a lot of money, and being very successful.”

Schlegel divides them into three groups. “Some can’t change. They’re still valuable, but every day that goes by they get two days less relevant. Some are, like Peter, open to change, and very willing to acknowledge that the market is different, and that we have to do things differently. The third category, which is actually where I think we have the most success, is they know enough to surround themselves and partner themselves with people who are agents of change.” 

Always be advising

Riguardi has been in the business for 40 years now and is embracing the changes with open arms. He counts this choppy market period as his third big correction. “I’d love to sit here and tell you that 2024 is going to be amazing, but I think it’s going to take a little longer to stabilize things,” he said.

He got his start in the bullpen at Williams Real Estate, where his father, Edward Riguardi, worked. He describes it as a tough, “Glengarry Glen Ross” environment of learning your ABCs of business: Always Be Closing. 

Still, Riguardi survived the baptism by fire and progressed quickly (“because I’m ridiculously organized — it makes people around me crazy,” he said), after learning that it was better to get a small client that would use him exclusively than try to hook a bigger client.

“That helped me a great deal,” he said. “The second thing that I figured out was it’d be good to call bigger companies that have many transactions underway, because, even if I can’t get the big transaction from the top person there, I can develop a relationship with people reporting to the boss and get smaller transactions. What I never thought of when I was doing that, which has been a blessing for my career, is that those people eventually got promoted, and ended up being clients of mine.” 

Another big lesson, learned from his parents: Treat everybody with respect, no matter who they are. 

“I might sometimes be a tough guy in this office,” Riguardi said. “But I’m a tough guy to everybody, and from the person in the mailroom to our most senior people, they all have a personal connection with me, and I’m very proud of that.” 

Today he’s in the office by 7 every morning, and spends the majority of his day talking to clients. The pursuit of a new client is one of his favorite parts of the job. “I love winning,” he said. “But I have to say it’s also a character flaw, because when I lose, it stays with me more than when I win.”