In this interview, Wayne Gearey discusses:

• The difference between retail and corporate real estate assumptions when it comes to deciding on a location;
• The profile of a location advisory professional;
• Modeling of the business assumptions vs. mapping assumptions; and
• Location strategy as a service, as a business model for follow-on services.

LBx: How did you get into corporate real estate and come to be an expert in location advisory services?

Gearey: I have been advising companies in North America, Europe, and Asia on market analysis using spatial analytics for over 17 years. I am trained in both GIS and business process engineering, and this gives me a unique perspective on modeling key business assumptions.

LBx: What’s the difference between site selection and location advisory services?

Gearey: Site selection is generally used by retail, restaurants, and hotels and is narrowly defined. These industries are consumer-centric. They look for customer traffic. Location advisory services, on the other hand, encompass broader logistics that relate to successful corporate real estate investments. Corporate real estate is labor-centric. These are two very different business assumptions that must be addressed with separate methodologies.

LBx: What is the labor issue?

Background

Jones Lang LaSalle (JLL) is an industry leader in property and corporate facility management services with a portfolio of approximately 1.4 billion square feet worldwide. LaSalle Investment Management, a member of the Jones Lang LaSalle group, is one of the world’s largest and most diversified real estate investment management firms, with $37.6 billion of assets under management. The firm has 36,200 people in 750 locations and 60 countries.

JLL offers a suite of real estate solutions to clients looking to consolidate, relocate, or invest in new facilities. These real estate solutions include agency leasing, property management, project and development management, construction management, valuations, capital markets, real estate investment banking and merchant banking, brokerage of properties, corporate finance, hotel advisory, space acquisition and disposition (tenant representation), facilities management, strategic consulting, energy and sustainability services, value recovery services and investment management. When most people think of looking for real estate options, they think in terms of site selection. JLL thinks in terms of location advisory services and the ecosystem around that location that determines its long-term value to a client.

Gearey recently won JLL’s DaVinci Award for Innovation. It is awarded to the top 10 innovators across JLL’s global operations. Wayne received this award for automating location advisory for a specific location search. With his model, what once took days of research now takes 30 seconds. Wayne is passionate about location and delivering the life cycle of real estate advice to clients.

Gearey: There is an entire ecosystem of influences to analyze labor factors – from skill sets, to healthcare, to cost of living, to crime, to economic climate. We call these “geographies of opportunities.” An appropriate location to achieve workplace management and other business and financial objectives involves a portfolio of factors – we analyze over 60 variables – that indicate how the location will perform over time.

What is critically important is determining the longevity of the labor pool in a particular area as it relates to a specific industry sector. Labor is generally the costliest portion of running a business – up to 80% in many cases and 6 to 7 times the cost of the real estate that supports the labor, so it is a critical assumption that must be carefully analyzed. We recognize that the location decision doesn’t stop at the initial investment; it includes a robust process that goes through to working in the office space.

There is an entire ecosystem of influences to analyze labor factors—from skill sets, to healthcare, to cost of living, to crime, to economic climate. We call these “geographies of opportunities.”

LBx: What can you tell me about your location advisory team?

Gearey: We have 300 researchers, from geographers, industrial engineers and psychologists, to economists. We developed interdisciplinary capabilities so that we could look at workplace management in a more innovative way. Specifically, we have 40 location advisory experts that work directly with clients around the world.

LBx: Where do you find these location advisory experts?

Gearey: We have an interdisciplinary team that can address all facets of location issues. We need people who understand spatial analytics, economics, business process, and real estate. There are all sorts of social, political, and economic determinants of health, for example, that have implications in calculating the labor value of a particular location. These skills are not easy to find. We look for subject matter experts and have to train people internally.

LBx: You have developed a very sophisticated location advisory service that isn’t just the plotting of information on a map, but involves sophisticated economic modeling and spatial analytics. How did you build this platform?

Gearey: We use a number of visualization tools including ESRI and MapInfo because they use geo-computational algorithms that help us visualize data. Specifically, for building custom spatial processes, we looked at a number of vendors and settled on SRC to build our platform. The problem is that geospatial vendors are immature in their ability to model business assumptions. The geo vendors are focused on the map and geo-technology. We are concerned about the business assumptions, and economic analysis. Business assumptions are missing from most geo-platforms. We worked very closely with SRC in developing our platform and educated them on the corporate real estate business. They were a breath of fresh air in that they were willing to evolve and learn from us about our industry.

LBx: Location is clearly a core competency, and a critical aspect of your business. What do you deliver to your clients?

Gearey: Our clients receive a detailed report from us on key metrics that determine whether a location is appropriate for a particular company – including workplace skills data, cost of living, cost of labor, health, education, business environment, type of economy, and so on. For example, we look at the risk of a transient population. Clients get a market scorecard that is based on location/spatial analysis.

I would like to add something else: our clients are increasingly asking us for upfront strategic planning and an initial assessment of a location based on some basic data. What used to take 3 days to compile now takes us 30 seconds. As a result, we provide this as a service to our clients, while our competitors provide it at a consulting fee. Our platform allows us to offer strategy as a service for delivering our real estate solutions, which include leasing, property management, brokerage services, acquisition, project and development management. We conduct on-demand labor scenarios for our clients.

LBx: What types of questions are your clients asking?

Gearey: We respond to such questions or objectives as:

• Can we achieve savings by consolidating operations?
• Where are the “next” locations we should be considering?
• How do our existing locations compare based on unique business and industry criteria?
• Each of these questions requires a considerable amount of analysis, such as:
  • Determining which existing operations can support various levels of expansion (one-time or phased);
  • Comparing specific costs and conditions in multiple markets;
  • Evaluating qualitative/quantitative trade-offs;
  • Assessing the quantity and quality of labor in specific markets or sub-markets;
  • Determining the level of risk a market presents and the future durability of the existing workforce;
  • Integrating client-specific data points and adjusting factor weightings for each location;
• Creating an indexed score for each existing location that can augment additional business considerations.

LBx: I recognize that you rely on a great deal of government data for your analysis, but I can’t help asking if the government turns to you for advice on the labor market.

Gearey: Well, I am invited to sit on roundtables and discuss the state of the economy and labor. We have developed perhaps the most sophisticated analytical modeling platform on labor. We rely on government data and private companies to model certain elements.

Business assumptions are missing from most geo-platforms.

Wayne Gearey, Senior Vice President of Location Intelligence, Jones Lang LaSalle, www.joneslanglasalle.com

LBx: Data is always a thorny issue. How up to date are the data that you use for your models?

Gearey: Validity in our data comes from using quarterly data. We rely heavily on PopStats, whereas data from the Department of Labor are 18 months old. There are also problems in the way the data are collected and modeled; for example there are data on IT jobs but not IT programs. We are using best practices to model data. We don’t know of any other company that demonstrates this capacity.

LBx: How do you stay ahead?

Gearey: We have a commitment to incorporating new thinking around labor into our analysis. That’s why we have such a diverse multi-disciplinary team. A system is only as good and relevant as the data in it; we make sure that we understand and monitor all the influences that impact labor and therefore result in good corporate real estate decisions for our clients.

LBx: JLL has invested in developing a location analytics platform because it is mission critical. Do you have any advice for companies that are interested in leveraging location intelligence for improved decision making, where it would not necessarily be a core competency of the business?

Gearey: The key to success is going to be a combination of the right tools, data and people. They want to avoid the garbage in, garbage out problem that can become apparent when the right model for competency is lacking.