Speaker 1:
From the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business.
For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism here at the NYSE and ICE's exchanges around the world.
Now let's go Inside the ICE House. Here's your host, Lance Glinn.
Lance Glinn:
Real estate capital markets are entering an exciting phase of opportunity and innovation. After navigating through the challenges of the pandemic, the sector is showing resilience and adaptability. With interest rates stabilizing and market sentiment improving, investors are gaining confidence about the short and long-term outlook of the industry.
As we approach 2025, there is a sense of optimism, as real estate continues to be a critical asset class in diversified investment portfolios. From commercial to residential, investors are using new avenues for growth in a rapidly evolving landscape.
JLL, that's NYC ticker symbol JLL, and its Capital Markets division stands out at the forefront of real estate investment and advisory services, empowering clients with market insights and strategic expertise.
With a global presence and local knowledge, JLL Capital Markets connects investors, developers, and owners with solutions across all asset types, from office spaces and multifamily properties to logistics centers, and more.
Leading JLL Capital Markets is today's guest, Richard Bloxam. With over a 30-year career at JLL, Richard's experience helps investors optimize their exposure to real estate and look beyond traditional investment models so that clients can unlock new opportunities.
Today Inside the ICE House, Richard and I will discuss his unique global career. We will detail the current state of the commercial real estate industry and dive into how AI is impacting JLL Capital Markets. Finally, Richard will expound on how he and the JLL leadership team, led by President and CEO Christian Ulbrich, are mapping out the company's future.
Our conversation with Richard Bloxam, CEO of JLL Capital Markets, is coming up right after this.
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Lance Glinn:
Welcome back. Remember to subscribe wherever you listen, and rate and review us on Apple Podcasts so that others know where to find us. You can also find full video episodes of the Inside the ICE House podcast on TV.NYSE.com and on the NYSE YouTube channel.
Our guest today, Richard Bloxam, is the CEO of Capital Markets at JLL, that's NYC ticker symbol JLL, overseeing all investment transactions, investment banking and corporate finance services globally.
Richard is a member of the JLL Global Executive Board. And in addition to his capital markets responsibilities, he's also the Global Executive Board Sponsor for the firm's hotel and hospitality valuations and research activities.
Richard, thanks so much for joining us Inside the ICE House and welcome back to the New York Stock Exchange.
Richard Bloxam:
Thank you for having me.
Lance Glinn:
So JLL emphasizes the power of innovative technology and expert insight to unlock opportunities for a brighter future. How does your leadership of the Capital Markets division at the company contribute to really realizing this JLL vision?
Richard Bloxam:
Well, I think that the industry has always been a data-driven industry way back when, whether that was shuffling bits of paper around with data on it. And really certainly in the Capital Markets part of the business and the JLL enterprise more broadly, is how do you bring that kind of previous historic analog approach to data to something that's much more digitized?
And essentially that's what we've been doing in the Capital Markets business, ensuring that we're capturing the data in the processes that we run. And then leverage that information to provide better insights for both our teams. And those teams then bringing those insights to our clients.
So it's a digitization of the real estate industry and the transaction processes within it.
Lance Glinn:
And while your primary focus is on the Capital Markets division of the company, as a global leader in real estate services, to you, how does JLL continue to stand out in what is an increasingly competitive and tech-driven market, especially with new players and new platforms, I feel like, constantly emerging?
Richard Bloxam:
I think you have to look at what it is that makes you somewhat different. How do you be famous?
And I think if you look at us as an organization, we've been established for a very long time. We're over 230 years old. And we have a platform that goes across geographies as far away as Australia and New Zealand,, all the way around the world. And I think that is one thing that makes us, I think genuinely different and unique.
And then it's the culture. Essentially whatever technology and data you want to put into an organization, if you don't have a culture where people are willing to share information, work together and collaboratively, and I think that's a defining characteristic of the JLL business brand and the people that work there.
Lance Glinn:
And how tough is it, I should say, to sort of enact that culture and make sure everyone's on the same page when you're talking about a business that is global, right? Where it's not just in one specific part of the world, it's offices throughout different environments, different cultures, unique perspectives. How do you make sure everyone's sort of on the same page?
Richard Bloxam:
Well, I think it comes down to leadership and ensuring that you have a pretty good discipline to how you bring people into the organization. How do you ensure that they understand what the organization offers? And be really clear on what kind of cultural norms and behaviors you expect of your teams.
This is not supposed to be a straitjacket, it's supposed to be an enabler. And we really, really aspire to providing the right environment for our people to be as successful as they can be, and to provide clients with simply the best service and advice in the industry.
Lance Glinn:
So JLL Capital Markets, 157 billion in global production volume in 2023, 240 billion in capital flows advised annually. It's clear that the division stands as a leader in the sector.
But in such a competitive landscape, I asked you just now how JLL stands out, what do you see as JLL Capital Market's biggest advantage? And how does the firm continue to innovate and set itself apart from others?
Richard Bloxam:
Well, I think I would repeat again about culture. I think that culture is embedded also in the Capital Markets business, where you work collaboratively together as teams. You're not competing with one another. I think it's a really important part of our business.
Secondly, that you have a willingness to be a pioneer. The real estate industry is often a slow to move industry, and I think technology doesn't immediately stand out as an obvious angle to change the industry. And within Capital Markets we've been pioneers in adopting technology to ensure our people have access to better quality information and provide genuinely new insights to our clients. So I think those are two areas.
I think the other is that real estate has become an increasingly sophisticated asset class. The assets themselves are becoming more operationally intensive, and the range of capital solutions that clients need and that we can provide are much broader now. It's not a, "I can sell your building, I can finance your building." It's, "What capital solutions do you as a client need or have need for?"
And we've been building up that expertise, whether it's from investment sales specialist asset classes, through to real estate investment banking and derivatives. And I think it's that holistic view of capital and how it plays a role in real estate and pricing that is truly the differentiator for our business.
Lance Glinn:
So one of the reasons we're having you on, besides obviously to talk about JLL's Capital Market division, is because the company is here to ring the bell in the New York Stock Exchange, celebrating the 25th anniversary. To celebrate this silver jubilee for JLL, what does it mean to you, the leadership team and the company, to really reach this really impressive mark?
Richard Bloxam:
Well, I think it's great to have a date where it gives you a little moment to pause and reflect on where you've been, the journey you've been on, and who's helped you. We're standing on the shoulders of many people that came before us.
It's also important for us to note that it's the 25 years of being a listed company, but that's part of a journey that started in 1789 as the organization. And I think that reminds us that it doesn't really matter what the world throws at us, we have an ability to be agile and shift and adapt our business and our business model to suit those needs.
So I feel like it's a really great little reminder point. But we don't want to dwell too much on the history, really we're here to try and shape the future of a better world for the real estate industry for the next... I'd love to do the next 25 years, I'm not sure whether I'll be on the podium then. But it's a great feeling.
Lance Glinn:
Well, look, when it comes time for the 50th anniversary, I'm sure we'll see you up there on the podium.
So your three-decade journey with JLL has taken you from London to Budapest, Austria, back to the UK. You spent time at Stanford in the Graduate School of Business. How have these diverse cultural experiences shaped your approach to leading JLL's Capital Markets division?
Richard Bloxam:
I think the great gift of being able to work in different countries is to understand that different countries have different cultures. And I think as you're working in a real estate industry, those cultures pervade in how people do business. And it removes an assumption that it's just always the same, which keeps you on your toes. I've always enjoyed that.
To me, whatever industry I had been in, as long as I was working with people from different backgrounds, it's just more interesting. I've always found that. And different cultures also come up with completely different solutions, and that's what makes origination of great ideas exciting.
So I loved it. It's not for everyone, but if anyone wants to do it, I'm happy to be an ambassador and sponsor for that. I think it's just a great opportunity. And JLL has given me that opportunity, so I'm very grateful.
Lance Glinn:
And how were you first introduced to JLL?
Richard Bloxam:
I was teaching English actually in Germany and Austria after I graduated, and I just happened to have an old graduate kind of brochure. In the UK they used to call it the milk round, they'd go around and give these brochures out, and I happened to have one with me.
So I'd love to say it was some kind of great intent for me to join, but that would be lying. I think I happened to have that brochure. But when I then applied, and I started really digging into what that business did and how it was expanding geographically, I spoke German, so I wanted to use my languages. And I just feel really, really fortunate that I've managed to end up in this really terrific industry with great people.
Lance Glinn:
Was there an initial desire, pursuit to be a teacher? Was that sort of like your first goal? You just said teaching English, was that sort of like an initial dream and then you eventually found your way to JLL?
Richard Bloxam:
No, I think it was more a reflection of the... I graduated in 1992 and the economic environment pretty much around the world, but particularly in the UK, was not great.
And I think the truth is that I actually hadn't decided what I really wanted to do, but I did know that I wanted to speak languages better, more fluently. So it was kind of an opportunity and a vehicle to do that.
I loved doing it, but I probably discovered that it wasn't a vocation, but it was a great experience.
Lance Glinn:
So from your start with JLL, I believe 1994 to now as we sit on the precipice of 2025, how have you seen just the overall state of capital markets and what you do in your division evolve? And what trends have driven these changes just over the three decade career you've had in the company?
Richard Bloxam:
I think there have been a number of big macro trends that have really shaped what real estate's role in the broader economy has become. And I think urbanization is a phenomenal kind of macro trend. Every day people are arriving in cities looking for somewhere to work, someone to live, somewhere to eat, somewhere to play, and that immediately unlocks the need for real estate to provide solutions to those people.
I think you've also seen a gradual, I don't know whether the word is sophistication, but of the financial markets. And it doesn't matter if you're dealing with equities, bonds, or the alternative asset classes, all of those have been on a journey to greater transparency, more information.
And real estate's been on that journey too, and I think we've had a really great run. And that's seen big pension systems and insurance companies around the world increasing their allocations to the asset class year-on-year over many, many years. And that allocation journey is still ongoing.
And so when you have bigger institutions all looking to get access to this asset class, that provides a great backdrop for professional organizations like ours to help them on that journey.
Right now, it's interesting to see how much private wealth and family office capital is looking to get allocated to the asset class. So that's keeping us our toes, making sure that we're able to solve opportunities and challenges for them as well.
Lance Glinn:
Has the investor changed a lot? Their wants, desires, needs, how you sort of approach them and how you sort of do your daily job, has that changed over the course of 30 years?
Richard Bloxam:
Oh, sure. I think in the same way that the advisory world has had to become more sophisticated, add more value, frankly, to warrant our client's trust. I think it's because the clients are also on the journey of understanding that to drive outperformance from the assets they own, they need to get more granular, they need more support.
And that's really what I think the enterprise approach from JLL brings to bear. Capital Markets is just one part of what a client needs to solve for. There's a lot of focus at the moment on how you drive net operating income improvements. And that's not something that happens by accident, people have to actively drive those outcomes.
Lance Glinn:
So Christian Ulbrich has served as JLL's president and CEO since 2016, has been with the company since 2005. How has his leadership helped push the company forward, and allowed you and the Capital Markets team to be innovative and obviously reach new levels of success?
Richard Bloxam:
I think Christian's approach when he came into the role was to really look at some of the bigger macro changes in the world. And there were two particular trends that I think he had great foresight to identify. One is how impactful technology would be on the world, but also how real estate could embrace it.
And your leadership is defined by key decisions and moments, and I think the perspective to say, "Technology's going to be really important for our industry." And that, "We need to invest in it. And that it'll take time for that investment to bear fruit." But I think it's fundamentally changed how we think about opportunity and client service.
And then on sustainability, we have a very strong advocacy that we have a responsibility in a highly fragmented ownership and occupier world, groups like ours touch more buildings than any single client can. And therefore, we feel like we've got not only an opportunity but also a responsibility to try and help create a more sustainable future for the people and the planet.
Lance Glinn:
And in a multidisciplinary industry like real estate collaboration is key, right? Capital Markets isn't the only part of what JLL is in the whole business.
How does JLL ensure that teams within Capital Markets work together, as well as your teams collaborate with others throughout the industry to really create that cohesive business from sector to sector, industry to industry?
Richard Bloxam:
Yeah. Well, we organize our business essentially through activities. And so the vertical that I look after is really around transaction and pricing of real estate.
But as you would know, you can't possibly do that in an isolated silo.
Lance Glinn:
Yeah. Can't do it in a vacuum.
Richard Bloxam:
You have to do that with collaboration across all the business lines.
And I think that if you look at Capital Markets in itself, I'll go back to the point I made around capital solutions. If you're just going to a client and saying, "I can sell your building," or, "I can do this," then you're kind of probably missing the broader conversation.
It doesn't mean that you need to be any less capable or great at doing that execution, but it's more the strategic relationship that really counts. And our clients expect us to bring more than just, "I know this," or, "I can do this." They expect us to bring the wealth of knowledge that JLL possesses to bring out great outcomes.
And I think we do a great job, we've got plenty of room to do that even better and to grow.
Lance Glinn:
So JLL, we've talked and you've mentioned this embrace of new technologies and this sort of digital transformation. And there really hasn't been a bigger advancement in technology over the last few years than obviously artificial intelligence.
How is AI currently being integrated within the Capital Markets division, and changing the way you and your team operate?
Richard Bloxam:
Well, first of all, across the whole enterprise we have a foundational platform called Falcon, and that is what all our AI applications are then built above. The way I would visualize it is that it's like a building, and it's the piles of concrete in the ground that are helping to develop everything on top of that.
And then within Capital Markets, we've got a particular suite of products that are leveraging machine learning and generative AI. That allow our producers, our client-facing advisors, to leverage insight and information that would be difficult for them to assemble just completely on their own. So it's very much an enabler to allow our people to do more, to be more effective, have better use of their time so they can spend more of their time with clients.
So that would be an application that we would use. So identifying what's going to be a likely trade coming up in the future would be one example, but it's kind of across the whole firm looking at how you can leverage that.
And we're still nascent in AI across any industry, and that's no different in real estate. And I'm sure there's a lot we don't know and there's a lot we'll discover. And if I'm sitting here in a year's time, I'm sure there'll be a lot more that we would talk about.
Lance Glinn:
And does that get you excited? How does that feel? Because it could be excitement, right, because there is so much more to this unknown AI world, but then there's also the sort of fear and trepidation that can come with that too, because there is still so much unknown in this AI world. How would you feel? Or how do you feel?
Richard Bloxam:
I'm definitely more on the excited rather than the fearful. And I think human history is just a constant stream of innovation, and this is just one of those next steps. And so it's here, it's going to be part of how businesses operate. And I think it's a responsibility, as a leader at JLL, to ensure that we're addressing that opportunity in the most effective way.
Again, I think the real estate industry in particular is a very... Every building is a little different and I think the role of the individual is going to remain pivotal in how we deliver outcomes.
We see AI as an exceptional enabler of those individuals and those teams, and that's where our focus is. And our teams are very involved in building that capability. This is not something we're taking off a shelf and just giving to them, it's really much more a collaborative approach to creating solutions that our teams really need and are asking for.
Lance Glinn:
And you mentioned AI as an enabler, not necessarily as a replacement in any way. Because, look, we've talked about its potential, it's being used within JLL's business. The human touch though of course remains just a key part to real estate as a whole, right? You need to have that human-to-human, that face-to-face interaction. That's something that obviously a computer-generated learning model can't produce.
How does the company balance that use of AI with that human expertise, ensuring that it's a synergy between the technology and between the human-facing client?
Richard Bloxam:
Well, I think, as I previously mentioned, I think when you're involving your teams in helping build the solutions that are going to make them more effective, and that's not to say they're not effective today, but how do you get them to have even more insights, even more information at their fingertips?
And I think that's the way that we believe is most effective in creating a harmonious relationship between the technology we're evolving and the great people that we have in the organization.
Lance Glinn:
So I want to talk a little bit about the commercial real estate sector. Since the COVID-19 pandemic, it sort of forced a global shift to remote work.
And while some companies have been bringing employees back over the last few years, not all have. And we've had CEOs and presidents on this program and some have brought employees back five days a week. Some are still in the, "Hey, if you want to be remote, you could be remote," sort of landscape.
How would you just evaluate the current state of the commercial real estate market here as we are about to begin 2025, through all the challenges it's had over the last half decade?
Richard Bloxam:
I think, first of all, the commercial real estate world is now very broad. And offices is one component of that and certainly has attracted a lot of the headlines. I think that when you look at the demand for offices, we're actually seeing really strong demand in global gateway cities in particular for the very best buildings.
And I think that that was a journey that had already started pre-COVID. So COVID sped up that journey to kind of what I would call a bifurcated market between those buildings that really will attract long-term tenants, providing the experience that's going to create the right environment for their businesses to be as successful as they can be. Creating a space for collaboration, space for mentorship. So I think that is an important factor. So the numbers tell us that certainly in that category of office, there's strong demand.
Now, clearly there are some office assets, irrespective of COVID, that were never going to have a future. And I think there's an enormous opportunity for the industry to look at how you repurpose those assets. How do you use the good bones of those buildings to be something other than what they had originally intended to be?
So I think the write-off of the office was never an accurate view of the future. And it'll be interesting to see how company's relative performance transpires over the next few years, to those that have a largely collaborative in the office approach versus those that have gone for a much more remote working approach. And I'm sure different businesses, different companies will have better or different outcomes depending on what they need to achieve.
So this has got a way to go, but certainly we're seeing resurgent interest from an investor aspect to investing in the offices sector as well. So that's another encouraging sign.
Lance Glinn:
And what about the retail space? Because retail is another sort of sector that everything is going digital in retail. It's just that simple, right? You tend to now buy things, while still could do it in a store, online, on websites.
How have you seen the retail sector of commercial real estate evolve over the last sort of greater than half decade, this has been going on for the last decade plus?
Richard Bloxam:
Well, I can't think of an asset class or sector in the real estate industries that has had more thrown at it in the last sort of... The global financial crisis, the digitization, online retailing.
And I think what we're certainly seeing is that, to a certain extent, online retailing has a saturation point that it seems to be reaching. And there'll be better data out there than I'm able to share on this podcast, but I don't think we're feeling like there's a significant extension of that online penetration. I think that it's settling out.
And certainly what we're seeing is there has been very little construction in retail. There's very low vacancy, particularly here in the US. And when you had rents re-based, you're actually seeing really, really great rental growth emerging in what is a low vacancy market.
So yeah, I think retail is looking rosy. And it's certainly attracting a lot of capital both on the debt and the equity side. And no longer the slightly forgotten part of the asset class sector, it's really, really resurgent.
Lance Glinn:
And when you're talking to investors, how do you balance the demands of these global investors with obviously the need for local market knowledge?
Because I feel like with real estate, it's something that you have to kind of combine. You have these people that want to look outward, but you need then them to work with these people that obviously know the markets that they're going to invest in like the back of their hands. So how do you sort of balance those two things?
Richard Bloxam:
Yeah. It's kind of like patting your head and rubbing your tummy at the same time, trying to get that right.
Look, I think that's our job. Our job is to make sure that you're seeing global trends, macro trends, you're able to serve clients at a global scale while still continuing to deliver really outstanding local knowledge.
And real estate in the end takes place somewhere, it's in a geography, and there's going to be local nuance that you're going to have to bring to bear. I mentioned earlier that the asset classes, every building is a little different. And that little difference can make a huge difference when you're pricing or you're thinking about rent or future occupation.
And you need that knowledge on the ground, you really do. And I don't believe that you can be a great capital advisor in real estate if you don't have that granular knowledge. And that's a key reason why we think that the JLL overall proposition is well set. And hopefully our clients continue to see us providing additional accretive value on the basis that we're doing that global and that local.
Lance Glinn:
So here in the US in September the Fed cut rates by 50 basis points, most recently in November they cut it by another 25, and there is anticipated to be a few more cuts on the way over the next few quarters.
What impact have these decisions and really the economy over the last four plus years had on investor appetite? And how are you and your team adapting to what these high rates were, and now obviously with rates dropping lower?
Richard Bloxam:
Well, the challenge for the industry was essentially indigestion at how quickly interest rates rose on the back of what was unprecedented levels of inflation. And our industry tends to struggle when there's very significant and sharp changes in the cost of capital. And that takes a little while to digest and for repricing to take place.
But there's nothing unusual in the cost of capital shifting, we've seen it over decades and decades. And the real estate market obviously then needs to respond. If you look at the recent rate cuts, that's in line with inflation having come down, but also the federal banks, the ECB, the Bank of England, the Bank of [inaudible 00:30:37], all trying to navigate that combination between keeping inflation under check, but also providing enough room for incentivizing growth.
And look, I think the real estate market and the activities that we do tend to be much more reliant on a combination of that GDP growth and an interest rate stability. So less about actually what the rate is, but that that rate is stable. And we've been living through an incredible period of instability.
And so the recent changes in the 10-year treasuries are not something new, and we'll have to see how that plays out. But it feels like there is more momentum on both the lending and the equity side in the markets at the moment.
Lance Glinn:
And if those rates do stabilize, and like I said there is anticipation that the Fed could continue to drop rates, especially here in the US, what would that do? Or what could that do, I should ask, for investors and for JLL Capital Markets? If that stability comes, of course.
Richard Bloxam:
Yeah. Investors also want a degree of confidence about where rates are going to be, and that allows them to make decisions. And it's no different actually for corporates who are leveraging credit to grow their businesses. So we're part of that broader reliance on stability.
So over history you've seen when rates are stable and GDP growth is in place, activity seems to be significantly elevated. And so it's pretty difficult to predict right now exactly where that will settle. But if those two things hold true, then there will be more activity and investors will be more active. They'll be more confident in the outcomes that they can drive for their end investors.
Lance Glinn:
So Richard, as we begin to wrap up, as you sort of map out the future for JLL Capital Markets, what does that look like as you put in place a plan for the next 5, 10, 15 years, hell, even 25 years when we're back here talking about JLL's 50th anniversary as a listed company. What does that future look like?
Richard Bloxam:
I think that we're taking a number of those strands that we've already been working on and embedding them even more deeply. I passionately believe that we need to be a capital solutions business, and so we'll continue to grow our capability to provide strategic advice across all capital opportunities and outcomes.
I think the asset class range is going to continue to broaden and become more specialized. And I think that providing that granular specialist knowledge is going to continue to be a really important part of us providing a service.
And technology, this is not going to go away. And I think you're either in and you're really committed, or I think over time you can really run the risk of getting left behind. And if you do that technology prudently and with collaboration with a great workforce, then I think you can really produce outstanding solutions for clients and then outstanding results for the business. That's how I think it'll shape up.
Lance Glinn:
And then as you look at the company as a whole, when you, Christian, the JLL leadership team convene, how are you as a group plotting JLL's overall future over the next 5, 10, 15 years?
Richard Bloxam:
I think, again, a little bit more of the same. I think we've got a good formula. I think the macro trends are very clear for us. I think we want to continue to elevate the brand. We're going to continue to put our clients front and center of everything we do.
We're going to continue to focus on having the very best people that we can have in the industry, and then ensuring that they're empowered with great technology and adhering to the values and overall business approach that we believe is the right way to work with clients.
And I think that formula is a good one. And I'm sure that there'll be tweaks and changes as the industry evolves, so that need to always be agile and think of new innovations has to be a kind of cultural norm. Change is ever-present, you just have to be really good at managing it. And not be scared of it, but embrace it. And I think our organization is really well set for that.
Lance Glinn:
Well, Richard, I do want to congratulate you and JLL on reaching the 25th anniversary. And when you do hit that 50th anniversary, I look forward to having you back Inside the ICE House. Thanks so much for joining us.
Richard Bloxam:
Well, I really appreciate the opportunity to have this chat. And yeah, I look forward to being there too. And maybe it won't be me, but at the very least I'll be cheering from the sidelines.
Lance Glinn:
Well, either way, thanks so much.
Speaker 1:
That's our conversation for this week. Remember to rate, review and subscribe wherever you listen, and follow us on X @ICEHousePodcast. From the New York Stock Exchange, we'll talk to you again next week Inside the ICE House.
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