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JLL Property Management COO Discusses Commercial Real Estate’s ESG Revolution

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The job of property management has been changing over the past few decades, but never faster than in the past twelve months. Beyond the obvious changes needed to overcome the challenges of the pandemic, it has accelerated a paradigm shift towards addressing environmental, social, and corporate governance (ESG) goals of owners and occupiers. Rapidly changing environmental regulations and compliance laws on local, state, and federal levels means the next five years in property management and office leasing will continue to be transformative. We spoke with JLL Property Management COO Kristin Mueller to better understand the massive impact ESG goals are having on the industry. 

Propmodo: How has the past year impacted ESG efforts?

Mueller: Covid is such an unusual event for everyone. In commercial real estate, it has shone a bright light on trends. It’s really caused us to stop and rethink. Very ambitious ESG goals were being set before covid became a household word, but achieving those goals was difficult. The pandemic actually helped us accomplish a lot in the past year. Because we had lower occupancy, we could embark on projects that were not disruptive thanks to fewer people working in the building. From a financial perspective, it freed up some resources, lowering operating experiences to redirect the money to tackle planned projects sooner, making the buildings more sustainable, more appealing, and more cost-effective.”

Propmodo: How has the way we think about managing buildings changed?

Mueller: Five years ago it was honestly about the lobby, the elevators, and restrooms. There wasn’t even much talk of amenities. Now it’s flipped 180 degrees, we’ve really moved to a mindset that’s much more like hospitality and retail, focused on the whole experience. 

Propmodo: How is the property management industry adapting to the new mindset?

Mueller: What we find is there’s been a gap between the leaders setting ESG targets and asset managers and on-site decision-makers. They have finite resources and a lot of competing needs for those resources. When you get ground to level, it isn’t always possible to act on those goals. That gap is closing, we’re seeing a distinct narrowing in the past year. Some of that is being driven by employees, more and more they’re helping drive the industry towards planning and implementing ESG targets. People are passionate about green initiatives, they’re passionate about the world around them. They want to feel like the workplace they’re going into is providing a safe and healthy place to do their job. 

Propmodo: What’s the biggest challenge to aligning stakeholder incentives towards sustainability?

Mueller: There’s a lot of impacted parties. We’re striving to accomplish as many shared goals. It starts with understanding all the cohorts’ objectives, what is everyone’s target? Then find as much commonality among them, understanding what’s in place today, then creating a plan. There is a lot in common when you get to the core of it.

Propmodo: What technology is being implemented to meet ESG goals?

Mueller: The big one is air quality sensors, they’re critically important. Touchless technology, implementing solar where it makes. EV charging stations. There are lots of specifics ways. From a pure data perspective, we roll that data up into a platform called Acumen that allows us to report across entire portfolios. That’s where we can get some really insightful and actionable information. That’s coming straight from meters or is entered from meter or utility information. 

Propmodo: What does the property management industry look like in 5 years?

Mueller: I think ESG efforts are rapidly going from nice-to-have to table stakes. This is not a fad, this is an integral part of property management today. Five years from now, it’s absolutely critical. At the end of the day, we’re working with occupiers, owners, and buildings to create buildings where people want to be. The same people in hotels or malls are coming into offices or industrial spaces. The same preferences in those areas are driving offices. We’re just human beings, more and more we want buildings that are safe, we feel comfortable in, that we know are doing no harm. We’ve shifted dramatically in the last five years, thinking about the fact we’re not managing spaces we’re managing places. We want a good experience in an office because we spending so much time there. 

Propmodo: How do these shifting trends impact the conversation around office leasing?

Mueller: I think in terms of sheer backdrop, what’s very clear is that is these ESG goals are increasing how leasing decisions are made. Tenants are deciding which building to select because of all these things we’re talking about. Employees have a lot of say, they select who they want to work for. One of the factors is where they will go to work. That’s a very real and specific thing. Globally, political, business, and social leaders are all hearing this message from people. It means compliance is changing rapidly. We’re seeing more voluntary compliance. We heard President Biden talk about changes to our own targets as a country. We’re building a compliance library to help all the people we work with navigate this rapidly changing world. That involvement, while it is becoming a requirement, is increasingly voluntary. 

Associate Editor
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