Photos: Michael Samples

The big Three commercial real estate companies

Photos: Michael Samples

The Big Three: A Story of Mega-Mergers

Leaders from CBRE, JLL, and Cushman & Wakefield share their insights on the future of the industry.

A wave of mega-mergers has created a triumvirate of commercial real estate power players: CBRE, JLL, and Cushman & Wakefield, which is months away from finalizing its merger with DTZ. In a roundtable discussion, Dallas-based leaders share their insights on the future of the industry.



As CEO, Markets, for JLL, John Gates oversees brokerage, capital markets, project and development services, property management, and retail operations in the United States. He previously was president and COO of The Staubach Co., which was acquired by JLL in 2008.

STEVE EVERBACH: Cushman & Wakefield

Steven Everbach oversees the U.S Agency Leasing practice group for Cushman & Wakefield. As market leader, he also runs the firm’s Dallas - Fort Worth operations. During his career, he has completed more than 8 million square feet of transactions valued at $1.5 billion.


Mike Lafitte is the chief operating officer of CBRE, where he oversees the firm’s geographically organized service businesses and its globally organized service lines. He was previously president of CBRE Americas.

As home to pioneers like Trammell Crow Co., Lincoln Property Co., The Staubach Co., and others, Dallas helped create the commercial real estate industry. From those early days, the business has grown to become an economic force—a $15 trillion business that’s as big as the U.S. stock market. It has also grown in reach and sophistication. Much of the evolution has occurred in the past two decades, with mergers creating mega-firms and technology helping to support international expansion.

Throughout it all, Dallas has continued to play a leadership role. Some of the world’s most influential industry executives are based here. We recently sat down with key players from the three largest firms— CBRE, JLL, and Cushman & Wakefield—to find out where the industry is headed, the biggest challenges they face, and where the greatest opportunities lie.

The discussion was moderated by Linda McMahon, president of The Real Estate Council.

LINDA McMAHON: Let’s begin by getting a summary of your roles within your organizations.

John GatesJOHN GATES: I’m CEO, Markets, for the Americas, which is our non-corporate solutions business. So I’m responsible for property and project management, all capital markets activities, and all leasing activities.

And how many people do you have working for you?

GATES: Many. In all, it’s about 8,000.

STEVE EVERBACH: I used to be one of them.

He’s OK to work with?

EVERBACH: Yeah, he’s OK.

Good to hear. Tell us about your current role at Cushman & Wakefield, Steve.

EVERBACH: I’m responsible for the Dallas-Fort Worth market, which includes all of our business lines. We have about 300 employees locally. I’m also responsible for our U.S. Agency Leasing group, which consists of approximately 600 professionals, including all of our offices and all the Alliance offices.

Great. Mike?

MIKE LAFITTE: I serve as the global chief operating officer for CBRE. My responsibilities include all product lines of our service business, globally, and then I support and oversee the geographies as well.

GATES: So that’s got to be, like, 60,000 people.

LAFITTE: We’ve got 50,000 employees today, in that group, and then we are working on an acquisition that we hope to close in the next couple of months that will take it to 70,000, the JCI and GWS business.

How do you strive to stand out when appealing to talent and clients and building a multinational team?

LAFITTE: Our approach has been to build a global company and global platform, much like the other two firms that are represented here today. We operate in a very respectful competitive world. We’re a service provider. When you think about our assets, it’s people. Our platform is our market intelligence, and it’s all the tools that we bring to bear to our people to deliver services for our clients. For us it’s about training, attracting and keeping great people, but then also investing deeply into our platform. At the end of the day, you’re serving the client. I think we’re all very client-centric firms. We’re already global, so we’ve got a great footprint to start with, so it’s just continuing to make investments to try to become a world-class company. Our industry continues to grow up. We all kind of started in a corner of the business.

GATES: Whether it’s our folks working hard and trying to out-compete Steve’s or Mike’s, it’s unique solutions at the point of sale. And in our industry, it’s the breadth of the things we are doing. Our client base falls into two big categories: investors and occupiers. I’ve heard Mike say this, and I totally agree. You would think they’re not even in the same sphere or industry if you get in a room and talk to them, because they’re very different. They all have unique things they’re trying to accomplish. They have problems they’re trying to solve. They have risks they’re trying to mitigate. They have opportunities they would like to find or would capitalize. We have to understand them well enough to show up and say, “We’ve got an idea that seems unique.” Or we have a platform and systems and technology and processes and expertise and experience that sort of nail it for them. In some respects, it’s different almost every time. That being said, every investor client we have right now says they need to put money out. “Bring me something.” One hundred percent of them are saying that. It’s a common element, but they’re looking for different things. We have to work very hard to understand our clients and what they’re trying to achieve. We then have to go do the work to come back and say, “This is something unique that might work for you.” That’s when we tend to get ideas.

At the same time, there’s a dramatic change happening in American business. In 2010, half the U.S. workforce was comprised of baby boomers. By 2020, that will be millennials. It skips a generation. We collectively have to get better at attracting those young people and then get them up to speed pretty quickly. Historically, the industry is sort of known for not having the best training and mentoring systems in place. So it’s working hard, but not making sure they’re getting better at it, too. We’re going to have to double and triple down on the number of young folks that come into our industry over the next 10 years or so.

Do you find millennials different in the U.S. than they are in other countries?

GATES: Well, culturally you have to be prepared for at least some subtle differences in almost every different country in the world. But there are some very common elements too. There’s a wonderful sort of optimism and there’s a purity about their view of the world. They do want to have an impact, and they want to understand why this is good for the economy and why this is good for society and why it has an element that makes them feel like they’re almost part of a cause. Companies that are successful today kind of create that element. There are subsets that are highly motivated by some of the things we were when we were younger too.

EVERBACH: To John’s point, we recently put out a white paper on millennials, and there were a couple of stats that astounded me. Approximately 40 percent of the workforce today is millennials, and in 10 years, it’s going to be 75 percent. All of us sitting at this table are baby boomers. Our motivations are different. Millennials are highly collaborative. They’re motivated by self-development. They look for new opportunities. They’re competitive, but they’re competitive in a different way than we are. They’re competitive with themselves. They do a benchmark of where they were a year or two ago. Their self-performance is important. At the same time, as I mentioned, they are highly collaborative. And I think you’re seeing that pervasive throughout not just our industry, but all the industries and all the companies we serve. In order to recruit the talent, we have to understand it.

I’ve known these gentlemen for years and years. We’re very friendly, but it is a war for talent. And each of our companies are different, and that usually is driven by the culture of the company. Platforms are similar, but we’ve got to offer a unique and broad opportunity. We have to have a platform of services and provide those individuals that are looking at Cushman & Wakefield with a career path that’s attractive to them. If we don’t do that, we can’t recruit the best people. And if we don’t recruit the best people, we won’t be able to come up with creative, value-added solutions for clients, and we’ll lose the overall war. So we’re very focused on talent right now as a company.

GATES: The trends have changed the nature of a couple of asset classes too. Office space is different in some respects than it used to be. I recently toured some WeWork space. [WeWork Cos. Inc. is a New York-based provider of shared workspace, community, and services for entrepreneurs, freelancers, startups and small businesses.] Just the nature of the space and how they use it is amazing. Multifamily has changed a lot, too. Thousands and thousands of units are 700-, 800-, or 900-square-foot open lofts. We didn’t used to build those, except in super expensive markets.

LAFITTE: Another thing I think is unique to real estate—it’s certainly become a real trend in this industry—and that’s this incredible, intense specialization in everything that you do. Whether it’s office or data centers or labor analytics or workplace solutions or sustainability— you find all these niche practices and an intense focus on expertise. And that’s true across capital markets, that’s true across leasing, that’s true across corporate solutions. The days of being a generalist are gone.

And those specializations are a lot narrower now.

GATES: Well, the good news about it, though, is it provides a much deeper level of expertise than when we were younger.

Mike Lafitte CBRELAFITTE: To the earlier point about knowing your customer, the language of the investor- client and the language of the occupier-client are very different. What drives them—their metrics, how they think about using space with real estate—is completely different. You’ve got investor clients that are looking at a way to make money, and occupiers, it’s a means to an end, in terms of establishing their corporate objectives. So if you’re Google, Apple, Microsoft or Bank of America—whoever you are—real estate is just a different thing. That specialization helps us all drive these strategies around the world and ultimately serve these clients a lot better.

But the investor is worried about profits, and it costs a lot more to build out those spaces that are amenity-rich and create a different kind of environment than what we’re traditionally used to. So how do you match that investor return perspective with the cost of delivering the product? 

GATES: It depends on what product you’re talking about. Office generally is where we gravitate. That’s where we make the most money, but it’s counter-balanced a little bit by increasing densities. The cost per employee to the occupier at the end of the day is not any higher. Maybe it’s even lower in some respects. In fact, we know it’s lower in a lot of respects, so the returns are there on the investor side right now. The fundamentals look healthy.

Commercial real estate is a $15 trillion industry, which is astounding to me. It’s as big as the entire U.S. stock market. But it seems like it doesn’t get the respect it deserves. How can we change that perspective? How do we get recognition for what we contribute to the bottom line of the global economy? 

LAFITTE: From the investment community side, real estate as an asset class is getting tremendous interest and more respect. The returns in real estate over the last 10 years compare well to fixed income and equity. So it has done its job. You’re seeing [investors] from all around the world, especially in Asia, increase their allocations to real estate. The appetite is huge for commercial real estate, because it has been a great asset. 

It’s funny. When you travel around the world, if you go to Australia, you go to Hong Kong, you go to London, you go to other places, property is front and center on the business page. You go to Dallas, it might be on the second or third page. There will be maybe an article a week that’s talking about real estate, because we’re in a very diversified economy. In these other places, where real estate is such a big part of the community and so expensive, it’s front and center. I would say, globally, the perception that we might have here that it’s not as big news as oil and gas might be to Houston, or banking might be to Dallas. In other parts of the world, though, it is. You pick up the paper in Hong Kong or in Sydney or in London and a third of the paper is going to be about property—both residential and commercial. 

EVERBACH: Historically, as an investment class, it has been fragmented and it hasn’t been as attractive as stocks and bonds, etc. But what we’re seeing is a perfect landscape right now for real estate, with low interest rates pretty much around the globe. You have nice economic growth. You have equity markets that are getting a little frothy. Investors are looking for alternatives and investing in real estate in general terms provides stability; it provides a better immediate return than stocks, and it has the potential for capital appreciation. It’s getting lot more respect, globally. We think that’s going to continue, and we’re going to see much more global volume of transactions going forward in the years ahead. 

GATES: I don’t view it as a problem ... not getting the recognition. The only place it might be a factor is, there are not as many young people coming out of school thinking, “I’m going to get in real estate.” At the same time, there are much bigger and better programs today. The University of Texas has a fantastic real estate program. I spoke at a University of Southern California function last week—they have a great real estate program, too. So the biggest impact on the industry, that lack of recognition, is attracting the next generation. 

On the investor side, we have more capital than we can deal with anyway, and I think allocations will continue to rise over time. Mike’s point is accurate. Real estate is not any riskier an investment class as some of the others. It’s less liquid, depending on how you invest in it. It’s not as easy or efficient for individuals to invest, but maybe that’s good, too. Because in the more entrepreneurial pieces where they might like to invest, you’ve got to be knowledgeable to do that. So, [the industry’s lack of recognition] feels OK to me, except for the recruiting and attraction of young people.

We hear that there’s more global investment coming to this region. Is that what you’re seeing? Do international investors seem to understand the true opportunity here?

EVERBACH: Foreign investment, thankfully, is increasing. I got into business in 1985. Back then, it was primarily a local business, with local developers and local capital. A lot of oil and gas money was going into real estate. That came to an abrupt halt in 1987 and 1988. We just had a capital markets group go over to the Middle East, meeting with foreign investors in a number of different countries. The investor had a list of their top ten investment markets in the U.S., and Texas was one of the top 10. From their view, Dallas and Houston are somewhat interchangeable. Because of the energy influence, Houston has been a bit more attractive than Dallas-Fort Worth. That perception has changed in the last six months. We’ve seen a lot of foreign investment activity here, and we’re starting to see more foreign buyers. We think that’s going to continue. Dallas offers a very, very stable economy, whether you’re a national or international investor right now, and Texas is the epicenter of growth in the U.S. The U.S. is obviously referred to and always thought of as a very stable economic environment and political situation. We see nothing but good things for the Dallas - Fort Worth area going forward. The fundamentals here are wonderful, and we don’t see that changing anytime soon. We’re somewhat insulated and will continue to be insulated because we’re still in a nice demand-and-supply balance from an overall perspective in real estate. For all of those reasons, Texas—and Dallas specifically—is going to see increased investment going forward.

GATES: The short answer is yes. The longer answers are: historically, in the office product sector, eight to 10 percent of trades were international capital of some magnitude. It’s 20 percent right now, and in the core markets, it’s as high as 40 percent to 45 percent. So there has been a drastic increase in capital flow. Dallas and Texas has better recognition than it used to. I would imagine a couple of years ago when Mike took a global job and started traveling, he told people what he did and his title in other parts of the world, they would say, ‘You live in New York then, right?’ It’s almost reflexive. Just like Americans don’t completely understand other countries as well as we probably think we do—no one can name the top 10 cities in China, for example. Yet, they’re all massive economies in and of themselves. Money always flows to the big core markets first: New York, Washington D.C., Boston, the West Coast. Because [foreign investors] know those names.

EVERBACH: I pulled a study from our capital markets group on cross-border investment, for 2007 to 2011 and then for 2011 to 2014. There was a 67 percent increase in the last four years over the preceding four years. That speaks for itself.

GATES: It’s also pushing out of the office sector, too. We’ve seen some big trades in the industrial sector, some big portfolio trades. Then there’s this phenomenon around multifamily; the marketplace that exists in other parts of the world is just starting to emerge here.

LAFITTE: It used to be that nine to 10 percent of all trades in the U.S., commercially, were foreign capital. Year to-date, it’s 14 percent. So that number is increasing. For markets like Dallas, it’s not as obvious and as apparent, because they’re not doing it in a direct way. They’re doing it through advisors and funds and they’re doing it through large transactions. Canada is at the top of the list in terms of foreign investors here, and has been, historically. We consider that, obviously, North America, so it doesn’t sound and feel as much like foreign capital. Our New York brokers, our capital markets team, would say one out of every four bidders on a transaction, if it’s $100 million or greater, will be Asian capital. It’s phenomenal. Germany is extremely active. Certainly, the U.K.. But the Asian capital is coming in waves. There are some restrictions, though. There’s a thing called FIRPTA (Foreign Investment in Real Property Tax Act), where we, as a government, tax foreign investment. So they’re coming in through ventures, through advisors and/or through bigger portfolio sales. It’s not as obvious in a headline that a building is now owned by this foreign entity. You just don’t realize it.

GATES: As it relates to Dallas, too, some of the newer wave of capital comes from a category of “sovereigns.” They’re looking for big trades, and there are very few. If you’re looking for a $500 million trade, there are none. It’s not going to happen here, so it has to go to New York or it has to go somewhere else first.

LAFITTE: In terms of Korean money and Japanese money, industrial seems to be at the top of the list. We recently did a U.S. investment interest survey, and Dallas came in third, behind San Francisco and New York. There are third-tier cities, too, smaller markets. But the gateway markets have gotten the vast majority of the capital. The core investment yields are just incredible.

Steve Everbach Cushman and WakefieldEVERBACH: Dallas is a Cowboy-type market and, historically, we’ve proven that with the boom and bust cycle. But I tell you, with all of the public and private investment that’s occurred here over the last 10 to 15 years— case in point being the Arts District—when you get people here, whether it’s a company leader or an investor, the city is markedly different and improved from 15, 20, 25, 30 years ago when I moved here. I remember going downtown, thinking that’s the epicenter of every city, and there was no one down there. I go downtown now, and to the Arts District, and it is a tremendous asset for us to show off . The cultural development, along with everything else that’s occurred, puts Dallas on the map now in a big way.

So let’s switch gears and talk about your companies as global competitors. How do you determine where you’re going to put your resources? You live here, but you’re doing business everywhere. So what’s your strategy?

LAFITTE: When you look at the global footprint, you’ve got to be where your clients want you to be. You start with that. That takes you to major markets. Where are the active, transparent, viable commercial markets? Where does capital want to go? Where do occupiers want to go? Where are jobs being created and where is there business activity? Those are the places you target. And you’re either a big, global ncompany, like the three of us are, or you’re a boutique. If you’re caught in the middle, then you’re struggling to figure out how to serve a global client. If you’re trying to place capital or serve an investor client, you’ve got that same issue. It’s great to be in the U.S., but if your vision is that you want to be a global company, you’ve got to be in all the global markets; otherwise, you’re going to be limited in terms of your services and your scale.

GATES: The strategy is not that hard. Capital wants to flow to the 60 biggest economies or cities in the world. And they’re pretty easy to identify. Then you can measure growth rates, and that impacts intensity and density of what you’re trying to do there. Execution is harder because we see a lot of consolidation impacting things here, and you have a view that’s probably very U.S.-centered. There aren’t many Asian businesses to buy. The industry is new. So you can say, “Well, we need to scale in Tokyo.” But it’s not as easy to do as it would be if you’re talking about San Francisco, for example. On the occupier side, it’s fairly similar with one difference: There are enormous opportunities in emerging economies, but they’re not the developed, sophisticated city centers that we’re used to working in. Consumer product companies in the U.S. look at Africa and say, “That’s going to be massively growing, eventually middle class, and we’ll want to sell potato chips or Cokes or whatever it is.” Going and executing there is not easy, but you still have to do it. You have to do it in Brazil and you have to do it in places in India and China that don’t have a depth of talent there. That part is not as easy to figure out. Strategically, we know exactly what we have to do. Getting it done is the hard part.

EVERBACH: And as John said, it’s client-driven. It’s investor-, occupier-, and client- driven. It’s hard to go into a new market because it’s not mature—the fundamentals aren’t there, and it’s hard. And then in each country, compensation is different.

GATES: Other than Africa, for our three firms, we’re probably in all the cities we need to be in for a long time.

LAFITTE: You have currency risks. There are all sorts of things that come into play. Currency is a big issue for a global company. Listen to any quarterly earnings report, and you’ll hear about hits against the U.S. dollar in terms of impact.

EVERBACH: Trade, availability of quality labor, and making sure the training is there for those employees, because real estate is specialized. It’s not just specialized in the U.S., it’s specialized globally. The global companies we are dealing with expect that consistent level of service. You have to have different practice areas serving those clients, not just domestically, but internationally. That’s the challenge. We’re all dealing with the same thing.

Is there any region or any country that you think has got the greatest long-term growth opportunity for you?

GATES: Clearly the Asian economies are going to merge into long-term. If Western Europe and the U.S. are the most mature economies in the world, there will still be massive opportunity here 10 years from now. That’s not going to go away. Here in the U.S., we enjoy the benefit of population growth, which is pretty important to have long-term, sustainable GDP growth.

Europe’s got a challenge around that, and we’ll see what happens there. But even there, there are a lot of opportunities. The fact that things are growing faster in some of the emerging economies creates maybe bigger opportunities, but it’s a long time out.

LAFITTE: The two obvious answers are India and China. After that you look at markets like Southeast Asia, which is a collection of places: Malaysia, Philippines, Thailand, those places. You’d look at Latin American, Mexico, all the way down through Brazil. 

GATES: Malaysia may be a place where we actually increase our presence.

LAFITTE: Yeah. Then I would add Africa. But with the occupiers, you can hardly have a conversation these days, certainly in Europe, without that topic coming up.

GATES: If there’s a day when you all make more money in China than you make in the United States, you and I will be out of the business. We will be fishing and golfing, because it’s going to be a long time.

LAFITTE: You’re exactly right.

So when you’re growing globally and you’re moving to a market that’s not as sophisticated as the U.S., and you’ve got to hire property managers and leasing people and others that are required to support your business, how do you maintain the level of excellence in terms of delivery to your customers, both internal and external? That’s got to be a big challenge.

LAFITTE: Well, that’s true. You start with rules of the road and how you operate your company. It’s culture and it’s commitment to compliance. If you’re operating in places where there’s not transparency, where the rule of law may be questionable, there are no shortcuts for a public company. There’s just no room for anything other than playing by the rules and keeping everything in the fairway, and this is how we’re going to do it. That may limit your ability to grow, because there may be other companies in some of these countries that aren’t going to follow those same rules, where there may be kickbacks or other things that are just no-no’s. We’re not going to do it. These violations that happen are extremely costly, if and when they happen. So you start there. 

Then, I think for all of us, you have a global practice leader that for everything you do, whether it’s corporate services, evaluations, or brokerage, they’re driving strategy across those lines of business with a deep compliance component to it. So globalizing IT, globalizing HR and all these things, so you’ve got a real core. It’s just what any large, multi-national company would do. These companies—the Fortune 100 and 500 that we all serve—they deal with those same challenges. You’re dealing with a global service provider that we live and breathe by the same rules that they have to comply with. 

GATES: We put different people in charge of emerging markets and mature markets. They require a different skill set and a different experience set. There are folks who know how to operate in that environment, one. Two, we have experienced people you can send over there who want to do that from other parts of the world.

And, three, there’s a silver lining. If you have not had the opportunity to travel to China or to India, it’s a real eye opener. These are bright, seriously motivated people, and they’re working harder than Americans are. They get off the curve pretty quickly and they are ambitious. Getting them going—that does take some time. But it’s unbelievable how impressive they are and the great things they do for our clients over there. And they’re just as passionate about doing it.

LAFITTE: They’re exciting markets. There’s 200 million square feet of office space under construction in China. Cities are coming out of the ground and it’s just incredible. Labor is available, and there’s new capital in a lot of these places. It’s an exciting place to be. 

GATES: And they’re hustling. You go into any of our offices in China on Saturday, and it’s full.

EVERBACH: But the decisions to open new offices are generally economically driven. You look at GDP growth, look at employment growth, and usually the companies that lead us there, or the investors that lead us there, have gone through the analysis. And there has to be a quality of available labor. If you can’t find it, you import it. And you have multiple quality people within the organization, hopefully, to import it and lead the business.

LAFITTE: I think when you look at the global consolidations that have occurred, and we’ve all been participants in that. If you can’t go build it organically, these acquisitions happen for good reason, to get you to that scale.

What are the two or three benchmarks that you track that provide your firm with the best insight into the growth opportunities, both domestic and global?

GATES: In the new markets, it’s GDP growth with employment growth, and quality available labor. Generally, our footprints are broad around the globe. You have to have a stable political environment as well, and that’s becoming more of a factor for consideration with all the flare-ups we’re seeing internationally. I think there will be expansion, but maybe not expansion in mass numbers into smaller cities or countries. 

You look at the fundamental metrics that Steve’s talking about, and base-level economics, certainly pay attention to job creation, as he said, and then population growth is a big deal, too. 

Even in the mature U.S. markets, there’s a different paradigm. Jobs now go where people are. In the old days, you went where the job was, right? So it’s a little bit of a different paradigm, but it’s still the very traditional metrics you would think of. We’re probably in most of the places we need to be for the next five years at least; it’s about scaling new businesses to help new clients get done what they need to get done. 

So doing business globally, John, what is the thing that scares you the most? What concerns you the most? Is there any trend you’re seeing, other than a little unrest here and there?

GATES: Well, whether it was us or people who came before us, there was foresight to say, “Let’s be a pioneer and be a global company and create tremendous capability globally and make sure it’s well-connected and works seamlessly. We can work country to country just like we do market to market here.” That’s not scary for a firm like us. That’s a good thing. It’s an opportunity.

Mike, do you have a different perspective?

LAFITTE: I certainly agree with what John said. The challenges or the things you worry about are, obviously, compliance. And consistency. How do we deliver the same quality of service in India as we do in the United States? Driving those things can be challenging. Getting skilled labor in some of these places—there aren’t brokers that have been in the business for 20 years, or leaders. The whole expat leadership model is, I think, kind of fading away, because more talent is emerging in these countries. But I think John said it well. You built these global companies. It’s then a matter of providing consistent service.

GATES: It shrinks the competitive set, right? So it’s good. And thanks to Colonial England for making English the world’s business language, we don’t have to worry about that.

LAFITTE: You have currency risks. There are all sorts of things that come into play. Currency is a big issue for a global company. Listen to any quarterly earnings report, and you’ll hear about hits against the U.S. dollar in terms of impact. There’s some of those things that are controlled, some that aren’t.

Anything you’d like to add, Steve?

EVERBACH: Well, you’ve heard it before: Trade, availability of quality labor, and making sure the training is there for those employees, because real estate is specialized. It’s not just specialized in the U.S., it’s specialized globally. The global companies we are dealing with expect that consistent level of service. You have to have different practice areas serving those clients, not just domestic, but internationally. That’s the challenge. We’re all dealing with the same thing.

Steve, your firm is going through a transformational change with the upcoming merger with DTZ. Do you see that this may be the last big merger for a while? Or are there more in the future?

EVERBACH: I’m very pleased to say everyone’s excited. The firm, when merged—assuming we get through all the regulatory issues, which we anticipate will be fourth quarter this year—is going to be a much stronger company, financially, from a resource standpoint, and from a footprint standpoint, from which to serve clients. We have some deep-pocketed owners that have committed to invest further in the business for the platform technology, etc., so we can continue to come up with very creative value- add solutions for clients.

And do you think this trend is going to continue, Mike? How many big firms can be created? Who is left?

LAFITTE: The windows open and close on consolidations, and this has been a very active window. When I think of CBRE, I think of larger transformational deals, and then there’s always these smaller, infield deals. For us the string of larger transformational deals started with the Coldwell company, and then Insignia, then the Trammell Crow Co., and then we bought ING’s Investment Management business, and then we bought a company in the U.K. called Norland, and now we’ve got the big, $1.5 billion deal with JCI’s [Johnson Controls Inc.] Global Workplace Solutions, their corporate facilities management business. Each one of those had a strategy, and they were large. About every three or four or five years we can find one of those that’s a fit. It has to be a cultural fit. There’s got to be retention, there’s got to be stickiness, and there’s got to be a strategy. Along with that, there are always kind of niche, infield deals, like recent acquisition of UCR in Dallas. You’re either a big global company or you’re a niche boutique player. Those in the middle find themselves challenged with serving global clients and growing. We’ve seen a lot of those, and we have been a part of these consolidations over the last few decades. I think the model has clearly proven itself to work. We love our position where we sit today. We’ll be a $13 billion revenue company after we close this deal. The idea that we’d have companies our size with 5 billion square feet under management—when I started in the business in 1984, it wasn’t anything that looked like this. But look at market share for any of us. It’s single digits, for the most part. It’s still a very decentralized business. I think the industry is positioned very well, and not unlike a lot of big other services companies. You’ve certainly got the big three or four accounting firms.

EVERBACH: There used to be eight.

LAFITTE: And again, what market share do they have? So it’s still a very decentralized industry.

EVERBACH: This whole thing is client-driven. Clients are expecting more for less, and you have to scale to do that, if you’re going to serve the global clients.

So who is going to be No. 1 in five years?

GATES: That depends how you’re measuring it. Once you get to enough scale, I don’t think that’s a terribly meaningful question. Of the big four accounting firms, who is the biggest, and would that be a criteria? I bet no one in the room can answer that question. I cannot. But it wouldn’t matter to me. They’re plenty big enough. So then the discussion shifts to best in capability and what can you get done. This industry is consolidated enough, and when organizations get large, that’s just not a qualifying criteria.

LAFITTE: The competition makes us all better. We’ve made each other better as firms, and our clients have expected us all to get better. Over the last decade or two, we all have.

EVERBACH: I’ve had the opportunity in the last couple of years to go around to different U.S. real estate markets and get a real feel for the talent in those markets. To Mike’s point, the competition makes us better. The quality of real estate professionals in Dallas I’d put up against any city in the world. Each time we’re competing against these two gentlemen and their companies, whether it’s occupier or investor, we have to be on our A-game all the time. It’s about quality, as John said. It doesn’t matter on the scale. What matters is what solution you’re going to provide.

Let’s get your final comments on what you think the future holds for your firm locally and globally? I’ll start with you, Steve.

EVERBACH: Locally, we want to continue to grow. We’ve almost doubled our presence in three years, since I came back to C&W. We want to grow, but we want it to be controlled growth. In our DFW office, like other offices around the country, it’s about the quality of our professionals. It’s about preserving our culture. We have a very unique culture. It attracts a very high-quality individual, and it attracts an individual who is very team-oriented, who’s collaborative, who wants to retain a little bit of an entrepreneurial spirit, as we structure our teams around the clients. We’re not going to grow just to grow; we’re going to grow methodically, where we can preserve the culture.

How would you define that culture?

EVERBACH: Teamwork, pride, character, respect, and work ethic.

OK. John? What’s ahead for JLL?

GATES: I’ll answer the last question first. Culture is so important, and it needs to be in the DNA of the individuals. We try to describe it and you’ve got 37 words on a page and that’s too many, right? So we have whittled it down to teamwork, integrity, and excellence. I grew up working for a guy who used to say, “Win, and do the right thing. And by the way, the second one is more important than the first.” He said it a thousand times, and it just becomes part of who you are and what you stand for as an organization. So culture goes deep and it matters to us a lot. And I promise you, Mike is going to say the same thing. 

In terms of the future of the business, Dallas - Fort Worth is going to be a tremendous place to live over the next generation; the young people here are very lucky. Our firm has a rich history here. The Staubach Co. was here—Roger is still here. Dallas is big business for us, and it’s going to continue to grow. The market has visibility nationally and globally with the firm, and that’s a good thing. I feel good about our business over the next decade. 

The one thing we have not talked about, and it’s the single biggest thing I think we probably all are kind of watching and wanting to figure out, is technology, which will inevitably change our business. In some ways, we’ll be real beneficiaries of it, because it drives productivity, it drives innovation, it allows us to do fantastic things for our clients, and we can get better at that every year. There’s a lot of money being invested around things that might sound like disintermediation to us. And when transactions are a big part of all our businesses­—and they are, and we need them to continue to be—then that part of it, you kind of watch.

Candidly, we are all pretty good at innovating, for real estate firms, but to compare what we do to real technology that’s transformative, it’s different. The dollars and capital that are dedicated to that, the size of engineering teams, the feedback and iteration loops—we know it’s going to happen. This is fantastic, right? But there are countless development hours that went into that, that had that feedback loop, that had massive amounts of money behind that. And as big as we are, as much money as we have, we don’t have that. We’re watching that stuff closely, and I’m certain the other folks are, too. 

So you want to be the Google of commercial real estate?

GATES: You don’t want to get hit by a bunch of numbers; you need to be a part of transformation, not a victim of it. That’s the way I would think of it. And we’re figuring out how to do that, right?

EVERBACH: From a technology standpoint, we’re dealing with static documents from a reporting and analytical standpoint, and we need to have active documents for reporting and analytics going forward. That’s a great point. 

GATES: We create the data though. The data in and of itself would not be a holy grail; the ability to interpret or do something with it should be the value add that we always provide as firms. But the industry is rapidly going through a transformation where data is going to be aggregated—I’ll use the term “sanitized.” So it’s sort of consistent and not redundant that’s in the databases and available for use in ways that it never has been. It used to be in Steve’s head when he was a broker, Mike’s when he was leasing buildings downtown years ago—and now it’s much more accessible. So you still have to be artful at doing something with it. But that is the big-time change that’s happening right now. There are things we would look at five years ago and almost laugh at them, and we’re going to go through that phase, I think, right now, in the next few years.

LAFITTE: Our core values are very similar to those mentioned. We refer to it as RISE, which stands for respect, integrity, service, and excellence. We work hard to run our firm with all of those values at the core. We’re aspirational by becoming world class. We’re already global. We’ve got the footprint and all those things, but it’s about people and taking an entrepreneurial company in an industry and turning it into a world-class company. That’s our aspiration. 

It’s a very different mix of business. It’s diversifying globally, but it’s also diversified by line of business. So this outsourcing business, this corporate solutions business and healthcare business, today half of our revenue is contractual revenue. Twenty years ago, for most of the brokerage firms, 90 percent of our revenue was one-off transactions. I think it will make firms like us less cyclical in the next downturn, whenever that happens. So we’ve been very intentional in terms of building a firm that has good diversification. The occupier business—it’s only 25 years old, as a specialty. The other activities we’ve been doing, we’ve been doing for 100 years. Leasing is not new, selling buildings is not new, doing evaluations is not new, but for the last 25 years, this occupier business, people don’t quite yet understand and appreciate. We talked about, in some markets, real estate is maybe not as front center on the business page. This outsourcing and services business that the industry has built has become a big thing. And I think growth trajectory for that is good. 

GATES: The U.S. companies are leading the pack, and they’re not mature at all.

LAFITTE: Right. It’s opening up in Europe, opening up in Asia, opening up in Japan.

GATES: All of our healthcare businesses, that industry is going to consolidate. Outsourcing will be part of that. 

And all these operating companies are spinning off their real estate assets because they don’t want to manage real estate anymore, and that has to be a big opportunity for you as well.

LAFITTE: That’s exactly right. It creates a huge amount of jobs in our sector. So if you’re down at UT and talking about all the opportunities in the past, to get into real estate, when we got in, there were just a few paths. You could go into property management or development or brokerage. The specialty practice groups have opened up many more job and career opportunities for young people coming in. 

And, getting back to the technology thing, the workplace is changing. It’s densification. It’s urbanization. The facilities are being run by technology—if you’ve got a Nest thermostat at your home, you don’t have to get up and get out of bed; you just pull out your iPhone, if you’re lazy, and change the temperature. So it will be more efficient. Technology is an enabler for more productivity in terms of kind of the workplace. But what’s going on within the footprint of the workplace, we also see big changes there.