$120M portfolio transformation fueled by actionable real estate data

A global financial services provider needed to transform its portfolio strategy as part of an organization-wide effort to generate liquidity it could invest back into its business. While a reduction in office space was typically included as one of its traditional cost-cutting measures, the company suspected its real estate offered more opportunities than what met the eye.

To significantly reduce its annual run rate, or its ongoing total occupancy costs over time, the company’s leadership first had to figure out which properties to retain, release or downsize. The goal was to deliver as much bottom-line savings as possible while realigning its portfolio for success in the future.

Coming out of the pandemic, the company was at a crossroads. The organization had already made the decision to transition to a hybrid work model. But as the world started getting back to normal, the reality of what that meant for its office and retail spaces was far from clear.

If this leading financial corporation cut too much space, it could be left scrambling during a future growth phase. But cut too little, and the financial albatross could hamper its competitiveness against rival banks and investment firms.

As its real estate became further intertwined with its focus on hiring and retaining top talent, the organization found it increasingly difficult to agree on a path forward to truly operationalize hybrid work. Numerous stakeholders and service lines were working on multiple business objectives simultaneously – and questions relating to the current and future size of their portfolio pervaded every discussion.

The questions facing this market-leading financial services firm were many:

• Where are our best opportunities to improve the financial performance of our real estate portfolio?

• How can we optimize the use of our new and existing space?

• Where am I spending more than I should?

• Where is the best place to relocate an office or branch, or open new ones?

• How do we attract and retain talent?

JLL knew that its client needed clarity. The linchpin to forging a solid portfolio optimization strategy was something nearly every enterprise was struggling to pin down: real-world data on how many employees were coming back to the office, and when. Those attendance figures had to be cross-checked with reams of space, occupancy, lease and transactional data across a diverse global real estate portfolio.

Collecting and collating information from so many sources to gain a clear view of the company’s portfolio picture was an overwhelming task – but one that JLL was well-positioned to execute.

Multiple JLL teams came together to develop a comprehensive program alongside the company’s executive leadership. Thanks to its longtime transaction, project management and facilities management relationship, JLL had a strong working knowledge of the company’s real estate assets, as well as direct access to many key data sources needed to start gaining a clear view of its portfolio.

“We put every form of data at our disposal to work,” says Charles Fegely, JLL’s Head of Business Analytics Consulting for Financial Services, Work Dynamics. “Much of what we needed was already being tracked, but it was vastly underutilized.”

Fast access to accurate, integrated data is a business imperative for any company looking to remain successful in the era of digitization and AI. But access is only the first step.

JLL brought a consultive approach and helped its client shrink its data collection and financial analysis turnaround time from weeks to minutes, allowing for real-time strategic planning among business units.

One of the first things that JLL’s team did was compare the client’s return-to-work data at select office locations with employee workstyle preference responses submitted via HR surveys. This provided a real snapshot of how many employees were coming into the office across specific locations and business units. Perhaps more importantly, it also built the foundation for higher-level analysis that drove vital decisions about the amount of space needed across its portfolio moving forward.

“The organization was focused on the average attendance on any given day, as well as the peak attendance,” says Diego Rodriguez, Senior Business Analytics Consultant, JLL, who wrote the code for the client’s custom dashboard. “But the most obvious metrics aren’t always the most useful.”

Case in point: Internal data showed a peak attendance of 65% at one of the company’s U.S. office buildings. A direct reading of those numbers pointed to the reconfiguration of its current space to accommodate this maximum potential number of workers. JLL convinced the client to consider a different statistical indicator.

A deeper dive into year-long attendance and occupancy data showed this office only hit its peak numbers a handful of times. The JLL team added another variable and discovered that 90% of the time, the attendance high-water mark was 36%. This type of advanced analytics is all about embracing and transforming data to uncover insights at the property, business unit or portfolio level.

“It was an ‘a-ha’ moment,” says Rodriguez. “Another consulting firm without real estate expertise might have tracked maximum occupancy without tracking anything else, and provided advice that was fundamentally flawed.”

Instead, the company reduced that location’s space to meet the real-world demand, with contingency plans that could allow common areas to function as workspaces during all-hands meetings.

“By applying a more robust scientific process and seeking patterns within the information, we were able to make informed predictions about future space needs while taking advantage of real estate market conditions,” says Charles Fegely, JLL’s Head of Business Analytics Consulting for Financial Services, Work Dynamics.

This data-centric approach has had an impressive impact on this financial market leader’s occupied portfolio.

Over three years, JLL recommended more than 300 specific actions across the company's global real estate, resulting in $120 million in annual savings and a reduction of more than 2-million square feet.

So far, JLL has overseen roughly $400 million of the company’s $1 billion spent on moves that include decommissioning of buildings, lease restructurings and buyouts.

Not only did JLL help its client identify new and better cost savings opportunities with increased speed and efficiency, but the team also combined disparate data sets with statistical analysis to compare traditional office leases and various flex-space opportunities in several key markets.

The financial leader’s portfolio optimization effort also provided the company with the necessary capital to relocate their corporate headquarters from an aging 500,000-square-foot building to a sparkling new trophy-class building roughly half that size, translating its business and hybrid work strategy into a real estate reality.

During a time of unforeseen workplace changes and lingering economic uncertainty, this company feels confident that its mid- and long-range portfolio strategies are ready to face the future – whatever it may hold.

“The rigorous approach to data helped us improve our overall financial performance,” says the financial firm’s head of CRE. “But it also gave us the vantage point to anticipate potential business disruptions, and shape future portfolio plans.

"What this collective team from JLL has built is truly leading edge from a CRE standpoint.”

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