How JLL has heightened its levels of expertise with a highly-skilled advisory team
As one of the biggest names in real estate, JLL’s footprint can be found all over the world, and its striking ability to retain – and develop – its status as an industry leader is illustrated by an incredibly strong global team.
Alex Tilley is a Director in JLL’s EMEA Data Centres team, which he jointly leads. Educated in Land Management at the University of Reading, Tilley started his career as a Graduate at Lambert Smith Hampton before qualifying as a Chartered Surveyor and moving to CBRE in 2011, where he entered the data centre sector completely by chance. After four years he started his own business – Alpha Real Technology – a private equity-backed organisation which advised private and institutional investors looking to enter the data centre sector, either by real estate or corporate investment. It is at Alpha Real Technology where Tilley structured a joint venture with JLL.
The latter outsourced its data centre work to Alpha Real Technology, and his expertise led to Tilley being asked to join JLL. Dissolving Alpha Real Technology, he co-founded JLL’s European Data Centre Advisory Team, and has been building a small, highly-skilled team which is taking on large scale data centre development and investment projects in London, Frankfurt, and beyond, since January 2016.
“I wanted us to be able to compete against other established real estate firms and corporate advisory teams alike,” says Tilley. “There was no real credible alternative to the likes of CBRE across Europe, and we wanted to offer that. JLL, as one of the largest global real estate organisations, gave us that platform, not only for the UK but across the continent for both real estate and corporate advisory. We concentrated on creating a small, highly skilled team, completely focussed on the data centre sector.”
There are challenges involved in operating as a small team, but positive ones as far as Tilley is concerned. His team has demonstrated that it can act on behalf of institutional investors through to hyperscale end-users, and high-profile businesses approach the group for expert advice, thanks to its extensive knowledge which is well-bolstered by the nature of being part of a high-profile company.
“As a team of four we are a little constrained in terms of our capacity,” Tilley admits. “Some of the projects can take up to two years, but that’s down to the level of due diligence we undertake. While time constraints may sometimes seem problematic, it’s a nice problem to have, but we always ensure our service is delivered to the highest of quality.”
A level of mutual respect between JLL and the end-user makes all the difference when working under potentially strained circumstances, too: “We see ourselves as part of our clients’ internal team rather than an external outsourced advisor. We don’t just advise on what we’re asked to do, we really get involved with all the internal stakeholder decisions to be made from real estate through to business risk, IT risk, procurement, the implications of outsourcing technology, and so on.”
This is what differentiates JLL from competitors. While other businesses may provide similar services, JLL boasts Tilley’s small, niche team that focusses on bridging the gap between real estate investment and corporate investment, together with occupational advice.
“None of our competitors seem to have the ability to stitch those elements together,” Tilley says. “That, coupled with our ability to understand what’s going on in the occupational market like no other, really gives us our competitive edge. We’re not just real estate professionals; we’re finance professionals and chartered surveyors, meaning we can advise from a corporate standpoint as well as a real estate investment standpoint – which is crucial given the way the market currently operates.
“We’re an alternative investment team as opposed to a traditional real estate team, and our clients are increasingly interested in all of the services we provide. Nobody else offers such a range of service within a dedicated data centre advisory team.”
This dedication is displayed by two of JLL’s current development projects in London and Frankfurt. The Point in Greenwich was a tired development in the heart of the docklands data centre market, standing as the former London Stock Exchange and London Fire Brigade data centre sites, and comprised three low-rise buildings. Tilley acquired the site in 2015 for TH Real Estate under Alpha Real Technology, and has since acquired planning permission for a new 140,000 sq ft data centre.
“We worked very hard on this project, and we broke ground on the site mid-2016,” Tilley explains. “We are due for completion at the end of August 2017, and that will deliver a brand new powered shell data centre scheme to the London docklands market, which has never been seen as a product set.
“What does that mean for us? It shows JLL’s capabilities to take a prime development site and ensure that the client takes the right advice to purchase sites at the right time in the market, and that the correct planning management measures are in place.” This has ensured that the product has been timed to market in such a way that it reduces leasing risk for the Fund and maximises returns.
As Tilley’s team is pan European, they have been working thoroughly to bring forward an East metro Frankfurt site, working jointly with a private equity group to, again, identify a lack of data centres land/buildings and bring product to market in a timely manner. Tilley and his team ran with this unique opportunity, launching a large development scheme within the heart of the metro area with access to all major metro routes in Frankfurt and ensuring the availability of a diverse power supply – this was crucial for this area of Frankfurt, which is significantly power constrained. Tilley dealt with Mainova to ensure that a diverse 35MVA power supply was secured. JLL is currently undertaking the planning permission process to create a 380,000 sq ft data centre, and engaging with end-users to pre-let the site, such is the level of trust and loyalty that JLL inspires.
Projects such as these require a great deal of primary research and planning on the part of Tilley’s small team: “We spend a significant amount of time each month looking at supply, demand, absorption, forecasting, and pricing, and as such we keep ourselves ahead of the curve,” he states. “We report these figures on a monthly basis, focussing on tier 1 carrier-neutral colocation markets, as well as secondary European markets. Looking at this ensures we’re not going to mistime the market and that our clients are kept in the loop appropriately.”
JLL also keeps its finger on the pulse of industry trends which are less specific to the company, such as the evolving infrastructure of cooling solutions and increasing power densities. The business is also seeing a greater emphasis on connectivity, and across Europe, more collaboration with private equity banks looking for industry-strong capital to buy them out for their platform and become more competitive. This is where JLL’s expertise in corporate advisory as well as real estate advisory becomes particularly useful.
“We’re really trying to position our team to help those businesses which are private equity-backed look at alternative finding options and, as such, help more mature institutional capital enter the market, therefore aiding liquidity and a continued growth of the data centre sector,” says Tilley.
He concludes: “We’re also forecasting that we’re going to see more end-user development in the market; we’ve seen a lot of hyperscale cloud end-users acquire large chunks of colocation infrastructures from third party operators, and I think the next wave of development will be ground-up development with close proximity to established colocation footprints. We’ve seen proof of this already and are excited to be a part of it.”