The hidden power of real estate in financial services M&A

CHICAGO, April 29, 2025 – Financial services firms have long relied on mergers and acquisitions (M&A) as a key strategy for growth, diversification and technological advancement. As M&A activity in the financial services sector rebounds sharply, JLL’s new research, Navigating M&A as a Corporate Real Estate Leader, reveals how corporate real estate leaders can drive value and operational excellence through the M&A process. The research also explores key strategies for optimizing real estate portfolios, implementing smart office solutions and aligning property decisions with new business models in a post-merger landscape.

“Corporate real estate is critical in M&A success in not only managing physical assets but strategically positioning the portfolio to support transformation while minimizing disruption,” said Bobby Magnano, JLL Global President, Financial Services. “Early involvement of corporate real estate teams in M&A due diligence is essential to identify property liabilities, lease commitments and portfolio redundancies upfront, ensuring that real estate strategy aligns with the business from day one.”

Global M&A activity in financial services rebounded sharply in 2024, with total deal value climbing to $411 billion from $240 billion in 2023 despite a decline in overall volume. According to PwC, 76% of CEOs whose firm made significant acquisitions in the past three years report planning to make one or more acquisitions in the next three years.

This trend is further supported by JLL’s Future of Work Survey, which found that 61% of financial services commercial real estate decision-makers identified revenue growth through expansion, M&A and new markets as a top corporate goal for their business in the next five years.

“M&A is a catalyst to optimize the real estate footprint – not only to cut costs but to reposition assets to support future growth,” said Sarah Bouzarouata, JLL Research Director, Work Dynamics and Industries Research. “Firms should proactively identify redundant properties, plan strategic exits and reinvest in growth markets and innovation hubs. A well-executed strategy ensures that the merged company operates leaner but also stronger, balancing efficiency with future-focused location and talent goals.”

While activity is growing globally, the M&A landscape in financial services remains highly regionalized. Across regions, real estate implications are tied closely to market maturity, regulatory outlook and the subsector dynamics driving deal flow.

• North America: In the U.S. and Canada, banking and fintech sectors are leading deal volumes, with mid-size bank consolidations and fintech acquisitions focusing on digital capabilities. These M&A activities are prompting significant real estate decisions, including branch network optimization and workplace investments in tech-forward cities. Simultaneously, financial institutions are shifting investments towards growth markets like Charlotte, Dallas and Austin, while reevaluating their footprint in legacy locations to align with long-term talent and innovation strategies.

• EMEA: Deal activity was more subdued in EMEA, with notable transactions in the insurance and wealth management sectors, as firms seek to improve efficiency and expand their cross-border market presence. While London, Frankfurt and Zurich remain key financial hubs, companies are optimizing their real estate footprints by strengthening positions in these centers while expanding shared services in cost-efficient cities like Warsaw and Madrid. This strategic approach allows firms to maintain a distributed yet coordinated presence across Europe, balancing commercial needs with regulatory compliance and talent access.

• APAC: Domestic and intra-regional consolidation is driving M&A activity in APAC, particularly in digital banking and life insurance sectors, with Japan, India, and Southeast Asia seeing increased transactions aimed at expanding market share and building wealth management platforms. Large financial institutions are acquiring digital platforms to reach younger consumers, leading to integration challenges for CRE teams as they scale up regional service centers. The region is experiencing growth in tech-forward markets like Singapore, Bengaluru and Manila, where financial firms are expanding digital infrastructure and operational centers to support both customer-facing services and integrated support functions.

   

The research delves into the importance of portfolio optimization, suggesting that successful strategies balance efficiency with intentionality. Mergers inevitably reveal real estate redundancies including overlapping branches, duplicative office hubs or underutilized assets acquired through legacy growth. But identifying excess space is only the beginning.

“In the context of M&A, portfolio optimization goes beyond cost cutting,” said Travis McCready, Head of Industries, Markets Advisory, at JLL. “It’s a strategic process of realigning the real estate footprint to support the newly merged entity’s business vision, talent optimization goals and expanded customer base. This ensures the physical presence aligns with and enhances the organization's evolving objectives.”

The research cites examples of successful integrations, such as Webster Bank’s merger with Sterling Bancorp, where strategic real estate decisions played a crucial role in reflecting the new brand and workforce model, and BMO’s $160 billion acquisition of a regional U.S bank.

Health and life insurance companies also pursue M&A to simplify portfolios, scale advisory services and sharpen their core focus, and real estate will be a lever for realizing those goals.

“Insurers who recognize the pivotal role of corporate real estate in their M&A strategies are better positioned to navigate the complexities of integration and emerge as stronger, more competitive players in the industry,” said Ben Bailey, Managing Director and Executive Leader for the Insurance Business Segment at JLL.

Another key focus of the research is the implementation of technology and smart office solutions for seamless integration. Data-driven decisions are essential post-merger, with CRE teams advised to integrate workplace management platforms, use occupancy analytics and deploy smart office solutions to streamline space planning and enhance efficiency.

“Smart office tools support more than just daily functionality,” said Mike Sandridge, Head of Technology Strategy & Client Solutions, Financial Services Work Dynamics and JLL Technologies. “They generate real-time data that can help corporate real estate teams assess how space is being used, which locations are underperforming and where additional investment may be needed. This is especially important in hybrid work environments, where headcount no longer always dictates square footage in a 1:1 ratio.”

Rather than viewing space consolidation as a mere consequence of change, organizations should leverage it as a catalyst for transformation. By strategically reimagining their physical footprint, JLL research proposes that companies can drive innovation, enhance collaboration and align their workspace with evolving business objectives.

Real estate strategy also should reflect how the business is evolving operationally, culturally and structurally. Integration planning must consider impacts to the supply chain, internal processes and governance in addition to the physical space. This alignment becomes particularly crucial when business models shift, such as pivoting toward digital banking or focusing on wealth management.

“Financial services firms are redesigning their spaces to support new business models and cultural integration post-merger,” said Donielle Watkins, Managing Director and Financial Services Industry Lead, JLL Project and Development Services. “The most successful transitions are those where CRE teams act early, collaborate cross-functionally and approach space decisions with a blend of data and future-focused vision.”

JLL’s research shows that commercial real estate plays a pivotal role in translating M&A ambition into operational reality. Institutions that treat CRE as a strategic lever rather than a downstream function are better positioned to unlock value, retain talent and execute on growth. Success depends on early involvement during due diligence, partnership with CRE advisors, thoughtful portfolio optimization, smart tech integration and a footprint that reflects the new business model.

Today’s swiftly evolving landscape is characterized by regulatory changes, intense competition and the demand for digital transformation. M&A continues to be a vital tool for companies seeking to achieve scale and enhance operational efficiency. As the sector faces mounting pressures, dealmaking has emerged as a critical pathway for financial institutions to strategically realign, gain market share and accelerate their digital capabilities.

In an industry that is rapidly transforming, JLL Financial Services offers the right alchemy of integrated technology, sustainability strategies and a forward-thinking approach to our banking, insurance, investment management and fintech clients. Whether clients are looking for us to optimize their real estate portfolios or manage their retail banking facilities, we serve as a trusted partner by developing real estate and advisory solutions to help accelerate growth while balancing risk. Armed with unmatched industry-focused intelligence and a dedicated understanding of the complexities of this highly regulated business, our experts deliver a consultative approach to clients with a spectrum of services and products throughout all stages of their real estate lifecycle.

Our ethos towards hiring and training top talent and providing a seamless value-driven client experience has positioned JLL as a domestic and global market leader within the financial services commercial real estate business. Visit us.jll.com/financialservices to learn more.

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