Jones Lang LaSalle 3Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“While still lagging in the capital markets, global leasing activity is now slowly improving, due primarily to higher leasing turnover in the United States and selected Asian markets.”

“LaSalle’s strong performance for its clients contributed to substantial capital allocations from investors. As Christie noted, LaSalle has raised $3.3 billion of capital year-to-date, including $900 million in the third quarter, as institutional investors continue to allocate funds to investors that they trust.”

” Procter & Gamble has announced just today that we’ve won the P&G Supplier of the Year Award, and that’s the third time we’ve been awarded that honor”

“the economic forecasts, as I’ve mentioned in the preamble, of generally being revised on the upside. That’s for the U.S., for Europe. I think Brazil and Argentina are the only places that feel like they’re going the other way — India as well. But that excepted, China, the Southeast Asian countries are all showing increases in forecasts for economic growth for next year. So those are positive background, that’s positive background material. What we’re seeing in more concrete terms is a steady increase in the — in market activity, in leasing across Europe and America, in particular.”

“because the move of the investment community has had into quality assets means that finding stable cash-producing core assets is getting harder and harder. So we, in common with many other investors, are moving out to a little bit along the risk curve to development of work, to work to assets where more value needs to be added in order to produce interesting investment returns and the investment returns we’re targeting. So the investment pace is going to be a challenge in the course of 2014. You heard the numbers, in terms of the total markets for investment sales. So far this year, will cap — will top $500 billion for the year as a whole. That demand is only going to get stronger, so it will be a lot of money chasing assets in 2014.”

“Yes, for sure. There is a trend — you called it secular, I think we’ll see whether how long it remains a trend. But in the U.S., Europe, in particular this trend of densification which comes in various forms. I mean, less square foot per person, smaller cubes, if you want to put it that way, is one version of it. But so also is working in what’s called alternative work styles, where spaces are much less assigned to one individual and telling is more prevalent, breakout spaces, huddle spaces become part of the total mix, and it turns out that, that combination is actually more efficient in use of space than the traditional style office or cubing. All these trends are tending to work together. And to an extent, they’ve been one of the reasons why the demand for leased office space has been comparatively slow to pick up in this post recovery — post-recession recovery period, one of the aspects, not the only driver”

“But it has another interesting effect, which is that, as it were, demand from just gross brute office space, accrued office space, it tends to be attenuated by these densification strategies. So the demand for high-quality office space actually goes up, and what gets dropped is the lower grade and peripheral space and high-quality office space is just our sweet spot around the world.”

“we are looking at ways of servicing our corporate clients across Africa because we just cannot avoid the fact that there is a demand there for real estate services in Africa, and the big corporations are now moving into Africa with some resolution.”

“there’s a generational thing at work here, too, where you’re seeing the latest generation in employees coming into the workforce so that those between 25 and 35 are much more oriented towards this looser arrangement of working space, looser working — so they can form teams and reform teams according to what they’re actually working on. They like to be able to work in Starbucks. They like to be able to work in the coffee shop. They like to be able to work in the corridors. So they’ve got a different approach to the sort of space they require. And when you’re talking about our corporate clients trying to attract those sorts of employees, they’re paying attention to those trends, and they’re trying to organize their office space in such a way that it’s attractive to draw in and then retain those sorts of employees. That trend also, is an overlay to this sort of the pressure on the cost per square feet.”

“This is a trend not a mass — a massive impact at the moment. It’s just a trend.”