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Morningstar | Jones Lang LaSalle Launch Report

Jones Lang LaSalle has overseen a boom in the commercial real estate services industry since the nadir of the real estate driven financial crisis of 2007. As the second-largest player in the space by market cap, it has benefited disproportionately from various tailwinds that have underpinned its impressive run of growth. Key to this success has been the company’s industry-leading brand reputation and a platform that melds complementary business lines in areas such as property sales, outsourcing, and leasing to serve its corporate clients.Although JLL nominally reports its segments on a regional basis, it also discloses the amount of revenue coming from each business line. Among these, leasing is the largest with around 36% of companywide revenue. In this business line, JLL’s brokers help owners and occupiers of commercial real estate with the leasing process, primarily by executing lease agreements. Similarly, the capital markets business line, which contributes around 17% of companywide revenue, is where brokers facilitate the sale and purchase of commercial real estate property. These two business lines represent a higher cyclical risk to JLL because of their more transactional nature.By contrast, property & facility management provides a more stable and contractual revenue source. This line, which contributes about 18% of companywide revenue, is where JLL provides many of the services needed by corporations that occupy real estate. Project & development services is where JLL helps companies that are looking to reconfigure their office space. Advisory, consulting & other includes various services for corporate clients.Finally, the LaSalle business line contains JLL’s investment management business that composes around 8% of companywide revenue. Given its scale, JLL is one of just a few options that serve as a one-stop-shop to multinational corporations that choose to outsource their real estate operations. Buoyed by trends such as urbanization, the institutionalization of real estate, and the growing tendency of corporate outsourcing, we expect JLL to post healthy growth rates as it continues to take share from its smaller and weaker rivals.