CONVERSATIONS : Andy Poppink, Chief Executive Officer Markets Advisory, JLL cohosted with CoStar

Sure. Yeah, well Andy, I know we'll go on to your new role, but you've clearly been overseeing EMEA at JLL. I'd be really interested to hear what you've spotted across the continent that's different between different markets and also with the US itself.

Yeah, that's a big question. Thank you first so much for having me here, I really appreciate it. It's a pleasure. It's also great to see the energy at MIPIM despite all of the craziness in our macroeconomic environment. So for me, landing in Europe to help support our EMEA business, I knew it was going to be challenging and I knew I would learn a lot. What's been really enjoyable for me is I've learned not just about our JLL business, but about the way markets function, about our clients, about employment law and cultural practices in this wide variety of places. I think we're operating in 27 distinct countries at the moment, so it's been a fantastic learning experience. There's some things that we do particularly well in certain geographies. Our team in France is an example, one that I've learned a lot from. They were able to accelerate some of the digital transformation that was really focused on the Paris market because it's such a large market. And one of the things I'd love to also tell people when they ask me, Americans in particular tell me about Europe because they think it's, you know, distant and they do things differently, it's just to remind them that the Paris office market is larger than the Manhattan office market. Wow, right? So just to put things in perspective, this is big real estate. There's some wonderful people doing just amazing work. To be able to learn from them, take snippets from what we do well in Germany, what we do well in the UK, what we do well in France, and apply that broadly, and then also take the learnings that I've had from two decades in the Americas to try to bring the best practices together, it's been a really enjoyable experience.

Sure, happy to. So first, I think of this in a global context and also in the property life cycle. The property life cycle is really grounded in my history as a tenant representative, but it's really driven by occupancy and tenant demand, right? Of course. So we are in this unique moment in time where we're still working our way through the future of work and the return to the office, and that varies fairly significantly from market to market. So large markets like London and Paris, we've got people back in the office. There's energy, there's enthusiasm about people working together and having the collaboration and innovation that comes with being back in the office. In other markets, in Germany for example, it's been a little bit slower to get people to come back to the office, and when they're doing so, it might be three days a week as opposed to five days a week. Globally, in the Americas, some of the larger markets like San Francisco, New York, much slower to come back, whereas others faster to come back. So there are unique circumstances, the living dynamics and culture that impact that. But what this has driven is, as we're trying to get people back to the office, we need to attract our people back. Mandates haven't worked in large part. It's how do we attract them back? There's two things that really have influenced that. One is the quality of the space, what amenities are we providing? Is it an attractive place for people to come back? Are we providing them with food and other services? And then the second one that's really more heightened in Europe is the ESG compliance. What that has done is put much more demand concentrated on those newer, high-quality assets that meet those two things. They're quality spaces people want to come back, they meet ESG requirements. So you take Paris as an example, you asked specifically about that. We saw the highest rental rates that we've ever seen in the central business district of Paris. Now that wouldn't necessarily follow the logical pattern if people are going to use less space because of work flexibility, but it's created a bit of a dichotomy in the market where the high-quality assets have a lot of activity and pressure, then there's a segment of the market that sees less, and then there's a further segment that potentially is obsolete, those stranded assets we've been talking about for a few years now. So I think the answer is depending on the specific segment and the specific locale, you have greater pressure and activity in those throughout Europe. You see it in every big city. It varies a little bit, as I said, Germany a little bit different than the UK and France today if you take the big three. But most of us thinking about Madrid, for example, Madrid is a bit of a complex one. People are back in the office a bit, but not to the same extent we have in other places. And that's where you start to look into the diversity of our European market or EMEA for me. Climate matters. In the middle of summer in Madrid, people are in the office. Energy prices going up, air conditioning on in the office, coming to the office. So there are some really micro factors that influence us. Because it's cold in the UK, people are going back into the office as well, as a theory.

Yeah, so I was in Silicon Valley last Thursday and Friday, and this all really started at midnight Wednesday. It was madness. I will say the people were calmer than I had expected, but I had dinner with some friends on Friday night. They were a venture capitalist, private equity, and then a wealth manager. Amongst the three of them, they had two phones going at all times, trying to move money to make sure that not just their companies that they work with, but the extended ecosystem was going to be able to function. I am grateful that the government stepped in the way that they did to ensure all of the deposits. The ripple effect had they not done that could have been massive. The biggest fear for me is it's not really localized to Silicon Valley, but what it represents from an innovation and risk tolerance standpoint, because we need to continue to fund innovation, which is inherently a riskier investment than property is, right? But those people are driving innovation for the next 5, 10, 15 years. Just stopping that cycle for even six to 12 months or slowing it down more dramatically than it has could have long-lasting and wide impact. You look at what this means for the property sector. Big tech drove the property sector for a number of years leading up until probably last year, and those new companies that are getting funded, those are the companies, right? So I'm grateful that it seems to be stable at the moment. Those runs on the bank, it's an old-fashioned run on the bank. It starts with one call and then the trickle effect accelerates rapidly.

Yes, yeah. And I think it's TBD. We'll find out over the coming months what impact that might have on interest rates. I think the hope is potentially that uncertainty allows for a softer landing, maybe a little more stability and certainty, but we shall see.

Well, first I think my favorite dessert is probably like a dark chocolate with a little sea salt in it, so I don't know what yours is. So is it a dessert question? I'm very excited and eager for this new role. In part, the roadmap to me becomes pretty clear about what we need to do to both stabilize the existing business that has been such a wonderful business for so long, serving clients in the manner that we do, while also accelerating the pace of change so that we are digitizing our business, finding new ways to work, new ways to engage with clients, and finding the right balance to do those concurrently. So it's this dual process of making sure we're empowering our teams to work with clients and do what they do while accelerating the pace of change. I have a very clear vision of where we're going to head in this. It's a little early to be able to share it, to be honest, but I promise to come back and share that with you in a few months if you'll have me.