Jones Lang LaSalle Incorporated (JLL) Earnings Call Transcript & Summary

Hello, everyone. I'm Chris Stent, Executive Managing Director of Investor Relations and Corporate Finance at JLL. I'd like to welcome you to this webcast. As a reminder, this event is being recorded and will be available for replay on our website, ir.jll.com. Our goal with this webcast is to provide our investors and analysts the opportunity to hear from a JLL leader on topics of interest and understand more about our company. Today, we will focus primarily on our leasing, property management, consulting and project and development businesses. Any statements made about future results and performance, plans, expectations and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in the annual report on Form 10-K of the fiscal year ended December 31, 2020, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. Joining me is Greg O'Brien, CEO of our Global Markets business. Greg has been with JLL since the acquisition of The Staubach Company in 2008 and previously served as CEO of the Americas. Greg will begin the webcast with a brief presentation followed by live Q&A. We will begin with questions from the sell-side analysts covering JLL. Please use the Q&A function to submit additional questions. Before we begin, I'd like to provide some context to help frame the discussion. Though Greg will speak to some current trends in business in the current quarter, we would like to focus the discussion on the significant longer-term opportunities in how JLL is well positioned to capture that potential. Greg, thank you for participating in the webcast. Before we commence the Q&A, let's begin with a brief overview and some slides about the business. The slides have been posted to our website, ir.jll.com. With that, I'd like to turn the webcast over to Greg O'Brien.

Thanks, Chris. Appreciate it. And thanks, everyone, for joining today. I'm Greg O'Brien, I'm the CEO of the Markets business at JLL. And today, I want to take you through an overview of our market segment and critically how it fits for our clients and our people in delivering solutions and then how it integrates with our clients across our other businesses into what I'll describe for you as one JLL. Markets includes several service lines. Next one, please, Chris. Thank you. Markets includes several service lines, including leasing, property and asset management, and it's a very important partner to our project development business, which is critical to most of our integrated client solutions. We look at the marketplace through a few different lenses to best align with our clients on where they are on their journey and on their focus. Service lines, which I just noted, asset type where we have deep expertise in specialties in those areas, geographically where we integrate and we grow our base working across our service lines and specialists and then industry sectors, which gets us to increased specialization to really drive client value. And I'll talk a little bit more about that. Markets is also -- sorry, Chris.

Sorry. Apologies.

He's quick. Very swift with his fingers. Markets is also the geographic integrator, really helping our other businesses to bridge to and then optimize our client work at the geographic level, where many of our outcomes are delivered. Leasing represents about 3/4 of our markets business in terms of fee revenue and it's JLL's largest business line. Property management is the operating of the assets for investors, and it works foundationally with our facilities management business where we can use our scale and benefit our clients. Our property management portfolio is over $3.8 billion. And our project development services business is critical. It's where we build and renovate in projects. It also is critical to many of our solutions across our other global segments. It's also the platform for our efforts in key areas such as the future work and sustainability. Next one. While we have different business lines, asset types and industry-focused areas, we're constantly thinking about how to deliver more value for every client in every engagement. We call that focus One JLL. Neil Murray, our CEO of our Work Dynamics business, spoke to you in May about the life cycle for clients on the occupier side, the one you see on the left side. Markets delivers services for our largest outsourcing clients, largely our work dynamics clients, and we source and execute for clients off one-off individual needs and then the fast-growing middle market across the globe. Those often mature into further services as they grow, as noted in these life cycles, including technology solutions and sustainability. Investors also have the life cycle, you see that on the right-hand side from tenant retention and leasing to asset operations, which would be property management, repositioning and capital build. Of course, our capital markets business is a deep partner in the asset acquisition, disposition, recapitalization and a broad range of services for investors. This allows JLL to take clients from capital deployment and optimizing and trading assets to value-add stabilization, operating assets and longer hold periods as needed. Both occupiers and investors also have critical broad thematics in the business intelligence, data management and technology areas as well as the need for sustainability services, which we deliver. Few firms can deliver this broader set across the globe and in a culture that leads with teamwork and client first. That's JLL. And that's the One JLL approach, meeting clients where their needs are today and then growing with them as they change. As we think about our markets business and across and integrating all of our businesses, we often start with one service in one location. And then those mature across the life cycles that we just talked about from those individual transactional relationships to more strategic multi-element solutions that we provide clients. This is the path that we look to take clients on and it works very well because we work well together across our businesses. As we develop strategies for our business, we look at some global macro trends. These are 5 you've seen from us many times, then I'll hit very quickly. The increased capital coming into real estate as we've seen a wave of capital coming from all over the globe that's coming to real estate assets. That creates great opportunities for us, as we work across the life cycle, help newcomers come and then help our existing investor clients really work on their assets and their portfolios. We think there's big upside in that for us. Increased outsourcing, both on the occupier side, large corporates have largely, mostly outsourced in areas like the United States. We see big upside in self-performers who we think will come to outsourcing in other areas of the world. We also see increased outsourcing from investors. Urbanization, which many have thought what's going to happen with that regarding things like COVID. We believe that urbanization and the densification of people will continue. And it's harder and more complex to get deals done in an urban environment, which plays really well to our scaled services across the life cycle and our ability to integrate for clients, both investors and occupiers. Our strong belief is the fourth industrial revolution really tech and data in everything our clients do and everything we do is the future. I'll talk more about technology and data in a little bit. And then sustainability. It's often been a big theme. It's becoming a bigger theme. And we're seeing it come to the forefront in areas like Europe today, and we believe it's going to be a big thematic and it's a big thematic for JLL and our clients as we go forward. A lot of questions on the future of office. So I'll give you a sense for what JLL believes and our 4 foundational truths about the future of office. We believe that the office will remain at the center of the work ecosystem. We also believe that the net impact of space usage and footprints of the COVID challenges will be minor in the short term. Health, wellness and safety are and will continue to be a very high importance to employees. But hybrid work is going to have a durable presence. It has in the past. It's been an accelerating trend, and our clients are finding the balance in hybrid work and being in the office, and they'll go at that at different paces, but we believe the office will be at the center of that ecosystem. So our focus is with all of our clients to bring them the best of JLL wherever we can. That's One JLL, delivering the most value for our clients wherever we can engage with them, penetrating, consolidating and shaping markets globally across our sectors and across our different segments together and anticipating client needs and meeting them where they are going. We believe at the end of the day, we win with the talent. We have great people and the right culture of the teamwork that has us always thinking about the client and how we can bring things together first. And as we move into the future, really differentiating with tech data, sustainability and other broader themes that are very much on the mind, on the forefront of the mind of our occupier and investor clients. So that's a brief overview of our markets business and how we're integrating it. I look forward to hearing your questions.

Thank you, Greg. The first question comes from Patrick O'Shaughnessy of Raymond James.

Thanks for hosting this event today, Greg. As Chris mentioned earlier, you were CEO of The Staubach Company when it was acquired by JLL in 2008. What was the rationale for selling Staubach to JLL at the time? And how do you think things have played out relative to your expectations?

Yes. Patrick, it's an excellent question. Staubach, for those who don't know, is a market-leading, largely domestic tenant rep firm. And our clients at the time were becoming more global and they were requiring more services. So it fits with some of the thematics that I was just laying out earlier, Patrick. Our first goal is we looked at that challenge and having to meet where our clients were going was cultural one. And we found that in JLL. Teamwork-based, client-centric, really focused on helping our people grow in their own career path. So that was a big connection. How has it worked 13 years later? It's amazing. It's been 13 years. Well, our clients have grown with us, and we have a lot more clients and they're broader. We've been able to take them on the journey globally, and we've been able to take them across a broader range of services and the great depth that JLL has and that we've augmented over the last few years. We've had strong growth from 2008, notwithstanding a great financial crisis, now COVID. We've had strong growth, and we've really shown, I think, a very resilient business in our recent core, but really expanding further than that. Our people have thrived. And I think we've exceeded client expectations. So looking back at our criteria, what we're doing, it's been a win-win. I actually think there's also strong parallels to the HFF merger. Great cultural alignment, client needs on the investor side, as I talked before, are expanding and broadening really great people with outstanding skills we think team first. And we're seeing an integration and early successes there as well. So maybe a couple of parallels for you, Patrick.

Interesting. Your profile on JLL's website indicates your job involves helping clients tailor or helping to tailor technology solutions for clients looking to use big data. Can you give a couple of examples of those types of client interactions?

Sure. An excellent question. First, our global team is committed to embrace tech and data in everything we do. We believe the future is digital and that virtually every client discussion I have gets around eventually to their tech and data journey and then how we can come together. So we've made big investments in this area, and it's making a difference. I'll give you a couple of examples of how technology is changing how we connect to client needs, what we offer and how we serve. We're using data to help target client needs better and to raise our win percentages by leading with technology and visualization, data for insights to help clients really make better decisions. We're creating connected digital experiences to lower the time to execution and to increase transparency for clients. One of our products is what we call our JLL tenant experience. That allows clients online to go on with our experts and visualize a marketplace or a portfolio or an asset and the related data to move through, say, the leasing process even when they can't travel. So as we went into COVID with these technologies in place, we had very quickly over 9 or 12 months, over 1,000 new connections with clients in this way. So we're changing. We are adapting to how we needed to work, but we're changing the way they work, making them more productive, and it becomes a little bit of a way of working as we go forward. So it's been a great differentiator for us. We're also serving clients better through the basics workflow automation, simplified tools, easy insights, things that allow the clients to iterate on strategy and at a time of disruption like this, our investor and occupier clients are thinking about their strategies, and we can help them through the visualization of data and bringing them information in a different way, go through [ reiterations ] more quickly. That brings us closer to their strategy, helping them run their business, and we think it helps us to add more value.

Got it. And then lastly for me, you spoke about the future of office in your slide presentation. With companies like Rite Aid moving to a remote-first model and company back-to-office plans delayed yet again generally until January or later now, is there any reason to be incrementally more concerned about the future of office than you were, say, 6 months ago?

That's an excellent question, very topical right now. Hybrid work, we believe, has a durable presence. It actually did before it was a trend that was coming on because of technology and other things. But like a lot of trends, it's been accelerated by COVID. Our view is remote-only and remote-first will be outliers at the end of the day. There's a pretty good history of those past experiments in fully remote and mostly remote struggling over time. So that said, we're in a health and safety crisis right now above everything else. So it'd probably be a little choppy as we've seen, and I'll give you some stats on what we're seeing in the short term. But we believe the office remains at the center of the work ecosystem to reinforce culture, drive collaboration and innovation and enable professional growth for our folks. We believe the net impact of the pandemic on space usage and footprints will be relatively minor in the short term. While we see companies -- well, some companies certainly will use a little bit less space utilization is likely to remain high on some days, limiting the extent to downsize. Also, there's some offsetting factors such as de-densification of workstations, additional collaboration and meeting spaces for growth. And then underlying economic recovery, which we're starting to see globally, again, a little choppy in some places is starting to drive demand, which will, we think, help the overall envelope. There was a broad trend of lower square footage per person. We think that might get arrested and changed a little bit, but we'll see how it goes, but we don't think it's going to be dramatic. One stat for you, office leasing, which has been the slowest to recover in the U.S. market increased 8% from Q2 to Q3. So we're coming off of 2020. We're not quite at 2019 levels. But what we saw at the end of the first half and candidly, we're seeing, as we get here deep into the third quarter, we're seeing a move back on the office side and then obviously, great growth in other asset classes as well.

Next questions are from Stephen Sheldon at William Blair.

Appreciate you doing this. On One JLL, can you just maybe talk some about the level of coordination that you have with other groups at JLL? How do you incentivize the people within your group to cross-sell to other groups and make sure that the JLL holistically is providing kind of the broadest range of services possible to clients? And kind of how much of that is formal versus making more informal or just more cultural?

Yes. It starts with our clients' needs. So the problems are more complex and broader. Our tenant representation teams would not go into a big assignment without getting a perspective on the buildings they're looking at from the capital markets professionals and vice versa. We're finding that we're better informed and our people do better when we do that. So there's constant collaborations every moment of every day. It starts with the bigger, more complicated things, but then if it comes a way of working. In each of our areas, our leaders in capital markets work dynamics in our markets business spend a lot of time together talking about where we are with clients, how we're segmenting what are we doing in the different sectors and areas, and we're very aligned on those strategies. So going to market and then executing and providing support for each other is a very natural way. When you start to win and your clients are happier, if you build muscle around it, and we've really built some muscle around it. And it starts with that openness of where teamwork is -- of our core values, teamwork is first. And that's how people thrive here. And again, not every person every day, but it's a broad thematic inside of our business.

Got it. That's helpful. And then we just love some more detail on the type of work that's being done in the project development services business. What are some of the bigger buckets of revenue there that we should think about?

Our project development business is -- I joke that it's the #1 second business in, although they do generate a lot of business on their own, and I'll talk about that in a second, but they match up really well across all of our different areas. If you think about the life cycle, even of a transaction, delivering the tenant improvements, delivering the lobby upgrades and things you need in repositioning a building. A lot of times, that involves the project development side and delivering on time, on budget with the design insights and other things that we can deliver. So we do that. And we have an excellent team on that. In addition to how they match up so well with us in the various businesses and being there across those clients, they do some really interesting things on their own. We built headquarter buildings for clients where they want to self-perform and we've become their owners' rep. We built the Atlanta Braves Stadium. We're building the Lucas Museum in L.A. So iconic things that as our project development leaders talk about change the skyline are things that we can be very inspired by and it gives our clients a sense of what we can do for them. Sometimes it's the mundane and basic things. Sometimes it's really impressive work. It's always impressive work, but it particularly is visually impressive.

Next questions are from Andrew Rosivach of Wolfe Research.

Greg, if you ever get the chance, I mentioned this to Chris, you guys did the build-out of our office here at Wolfe, and it's the coolest place I've ever worked in.

[ It's obviously ] a testimony, Andrew. That's a great way to start.

I don't know if I've seen Chris [ pictures ], but I'll -- it's really unique and what they did with the building. It's -- I think it's pretty amazing. Anyway, back to my question, JLL has obviously done much better overall than just focusing on office. And I think I'm interested to know what's happened to the mix of your business -- your mix of your revenues by property types, how it's changed through COVID? And then maybe what you think is how it's going to trend going forward?

Yes. It's a really good question. We've invested over the last couple of years to further penetrate a variety of high-growth sectors and asset types as I kind of try to lay out in the lenses that we use, including supply chain, logistics, industrial, life sciences, data centers. And we were out in front of them because our clients, investors and occupiers, we could see their needs shifting. So we think we had a lot of the right pieces on the board when they search. While some things maybe have been a little muted like office in COVID, others have just accelerated trends. The supply chain, logistics, industrials a great example, and that's up materially. Our life sciences business, health care, a lot of others. These are things that our teams are constantly thinking about where are things going, so that we can bring these core services, which really break down into fundamental things and put them through the lens of those individual industries and where we see capital flowing in others. Life science is a great example right now. It's interesting because people think of life sciences, maybe lab and manufacturing. It's definitely that. It's also a huge office use. So we see a lot of capital going in there. We're currently working with a long time life sciences client that's a high profile in the fight against COVID. We're helping them secure office, GMP manufacturing, distribution facilities in markets around the world. So it's -- you get to the right spot, you build the relationship to help them through early stage, and then there's big opportunities when there's inflection point. And COVID was an inflection point for a lot in life sciences. The data center is another interesting area for us, skyrocketing data use, including streaming services, virtual connectivity, all these things that are going on are changing how people are thinking about housing their data. Obviously, we're the big cloud players. We're a big player in that. And one of the things that's going to really change that is we're not going to get to carbon net zero, which a lot of the occupiers and investors have committed to, if we can't tackle really complex problems like data centers. So there's going to be big opportunities there. The solutions aren't readily apparent yet. But I think there'll be dynamics and dynamics when you're in the advisory role is really helpful. So we're working really hard to have that expertise across those different areas and work closely. 2020 and 2021 obviously be a lower percentage. But we've launched globally these other asset types and industry sectors, and we're seeing them -- we get fast growth components, others that aren't growing as fast eventually, as office comes back, we think that plays well. We think industrial and a bunch of these sectors have a lot of running room over the next few years. And we think that bodes well for our clients in those areas and for JLL.

And you actually alluded to one of my follow-up questions. When you look at your client verticals, say it's health care, say it's technology, say it's retail, would you call out any recent trends, say, for example, someone that perhaps wasn't as active during COVID, but that seems to be coming back?

Yes, another good question. We need to be where clients are going, so diverse across asset types and all that, we're now there, and we'll always be thinking about where we need to invest globally across the different areas. Certainly, tech companies, maybe not so quietly to many of you because you observed the industry, but they've quietly secured a whole lot of high-quality urban space during the COVID downturn. Longer lease terms, over 10 million square feet in just the last year in the U.S. during the pandemic. So while a lot of other people were waiting, others were building bigger beachheads in areas where they know they need to grow because they need to get to the labor. So we think there will be more growth in that area, and they've been very, very smart in how they've done it using the downcycle to get to something that was really critical to their business. Health care sector is growing globally. But here in the U.S., we still have an aging population. I could have mentioned that as a sixth trend or some megatrends that are out there. And health care still only outsources a small fraction of its work. We think there's big upside in that. Life sciences is building momentum for decades. It's recently become one of the most highly sought-after sectors, with big opportunities on the supply side for investors. And then in all of these new innovations that have gone on, big opportunities in new companies, and we're working on the occupier supplier side there. Retailers are very interesting. I think you read certain headlines that say retail is challenged, and they're certainly challenged players in every industry. We're working very closely with retailers who are not just working on their bricks-and-mortar footprint. They're thinking about their overall strategy and how do they deliver from online, which obviously is accelerated. We think about that as omni-channel. So our retail teams and our industrial teams came together a long time ago and really started talking to retailers about what this could look like, and they've become a lot more expert in supply chain and other areas, and that's played well into a real strength that we have. So our retail business is actually up pretty solid this year because we're in helping them get through transitions and changes. While the overall industry may be a little bit challenged, we think there's big opportunity in repositioning assets and other things. So last for you, finance, one of the biggest sectors and users of the space across asset types, has been the #2 uptake in the Americas this year and globally. And we handled several large banking clients and financial services headquarters deals in flagship gateway markets like New York City, and then we've also included many big commitments for them as they look at getting to different labor pools moving to portions, maybe the areas of the Sunbelt as they start to look at diversification strategies really to get to the labor over time. So very active in that business, which obviously is a vibrant part of our economy. So lots going on in a lot of areas, strategy shifts. And if you were the adviser and the intermediary over time, that's going to mean more velocity.

Next questions are from Tony Paolone of JPMorgan.

So my first question is, you gave the 8% sequential pickup in office leasing from 2Q to 3Q. Can you look across all of your revenue buckets that you're responsible for? Like where are you still furthest from normal, whether it's business type, geography or property type?

Yes. Good question. We generally see the same trends in the outlook that we saw in the first half of the year, some uncertainty in office, although coming off of 2020, not quite at 2019, industrial certain sectors really showing good strength as big strategic trends get accelerated, and we and others, we're well positioned on that. Overall, our leasing pipeline in the U.S. is very healthy. It's increasing. It's nearly back at 2019 levels, so that's across the portfolio. And we're noticing a few trends in there, some a little bit -- slightly smaller transactions, less really large transactions, but sometimes the pipeline transitions as clients build confidence, we'll see how those play out, but that's -- the pipeline is broader at this point, which I think is a positive for a lot of different reasons. I spent last week in Europe with our team and their pipeline continues to illustrate very similar expected continued strength in areas like industrial while the office pipeline coming back, not quite there yet to 2019 levels, but it's significantly stronger and momentum is better than it was in 2020. I don't want to be redundant on other comments, Tony. Certainly, industry sectors are really doing great. Life science is a good example. Others are continuing to come along and mature a little bit, health care, higher ed, we think those will create opportunities over time as business model shift a little bit in those areas.

Got it. My second question is as it relates to flexible working or co-working, what's your view on where JLL's role is in the future in co-working? We've seen your peers take on different strategies around that business. I'm just trying to understand like where a large global PREI services company fits in to what the business model looks like in the future?

Yes. We're a believer and you've probably seen our research that flexible components will be part of the portfolio -- it's part of the portfolio today. So we bridge very strongly into available supply that's out there. We counseled clients on it. It's more now the edge of their portfolios, although it might be at the center of certain things they do as clients try to match up their term and commitment to what their business strategies are in more dynamic areas. So we're -- we believe in flex as being a part of it. Our thesis at this point is we want to be the unbiased adviser. We work very closely across the ecosystem that's out there. We're going to watch it as it matures. We've built some of our own products to extend our -- particularly our management and operational side of our business, property management, facilities management. So elements of our clients' portfolio, both investors and occupiers will be more flexible, and we can provide those services like we do in other areas. It's almost like an asset type for us as we build that expertise and we're doing that. And then we're going to watch it while it comes through this, and we'll see over time where it goes. But we're pretty confident that it will be a part of our occupier portfolios and that it needs to be a part of our investor portfolios, and we're working because there are a lot of choices out there to help our clients optimize how to meet that marketplace.

Got it. And my last question is you talked a bit about One JLL, and we've heard for a number of years just the shift to trying to do things on an account base and providing a variety of different services to the client. Is there another side to that where with your larger clients providing One JLL, where they're pushing back on fees or getting a better deal? And how is that net out in the end?

Yes, it's a good question. Procurement is a part of our lives on bigger and more complicated things. Part of bringing it all together for clients is to shift out of -- you're providing one thing, so I can compare it to others, where really what they want is outcomes and value. So as we bring integrated solutions together, which need to be able to mix and match to where our clients are. They don't all go from one individual service line to us in one city and all of a sudden, I want to be totally integrated, there's a lot of places in between. So we work hard with our clients on their strategies and what they're trying to get to and then put together something that adds value. I've found over time and now 3 decades in this industry, clients will pay for value. So we don't feel a material fee pressure. There's some over time, it's natural everywhere, but we don't feel a material fee pressure if we're bringing more value when we come. And that's our goal. And not just on things we do today, but this is why we're investing so heavily in technology and data in sustainability in other areas, so that we are -- we stay ahead of and can go on the journey with our clients because when you get past the individual things we're doing, those are the big threats to their businesses that they need to get to, and we want to be there and continue on that growth pattern. So there's some pressure on it, Tony, but I feel like we're in a pretty good position being able to serve them in so many different ways and drive more value. If you stop driving more value, you'll definitely have challenges with pricing.

Next questions are from Alex Kramm of UBS.

I think this may be a follow-up or continuation of the prior theme actually. So can you talk and dimensionalize the cross-selling a little bit more? So for one, I think I was just asked -- I think you're trying to represent some of your clients more globally in multiple regions. So can you perhaps map out where you are in that process? And I assume that's what you look at? And maybe the same question, not just by a regional perspective, but also by services that you provide, does it usually just start with leasing and then you upsell to other areas? Does it go multiple ways? And again, any ways for us to say, like, hey, you're generally touching your best clients in 3 different regions and 4 different services, and there's a whole long list of clients where you're just getting started. So any way to dimensionalize that? I know it's a [ lot of question would ] be great.

Yes is the answer. Clients come in different ways across the spectrum. That's why we have the different lenses that I talked about. And that's why the partnerships between the different segments. All clients see is JLL when we come into them. So the big integrated outsourcing, which Neil Murray spoke to you about, our Work Dynamics CEO, in May, the big integrated outsourcing is the big clients, they are often global. They're often across a wide range of the entire life cycle of services, that's one client type, very important client type for us. Some of those are totally global, some of them are regional, but the migration for them tends to be more services, more geographies. It starts in geographies and in industry sectors, the way we go to market, asset types in winning and making the first connection usually around one asset or one service. And then as you get in and you understand more broadly what that client investor or occupiers goal is, it may be leasing and then project development to deliver the tenant improvements or things. And then there's -- it constantly starts. We're always looking for the new companies who -- and new investors who need help. We're always working to try to drive more value for them, meet them -- meeting them where they are. Some people like to buy out task and some are willing to go to fully vested and very strategic partnerships. So it's a little bit of a move to the write-off and with them, although sometimes clients break up and back up on that. We need to play in all 3. The middle market, really fast growth is a big market for [ that often ] leads with leasing or property management or one of our other services. But it starts with one service, goes to a few services, generally then across geographies, depending on where that client is. We have big technology clients U.S.-based who we've taken all around the globe. So -- and the fact that they can consistently get the same client relationship manager that will bridge all of the complexities of being global. That's something that very few firms, JLL is one can do that. We can take you from your city and your asset across a view that will take you to other areas. And importantly, looking for innovations in other areas around the globe, we've been a pioneer in urban logistics. And I was on with our Asia Pacific team this morning talking about urban logistics opportunities in Australia. And we were able to bring to that client views from other parts of Asia, from the United States and even from Europe and how we're doing it, which accelerates that investor's opportunity for how to think about it. So a long answer to a moderately long question, I hope it answers it.

Yes. But nothing specific in terms of any numbers that you had in terms of number of services used or kind of like trying to get to a TAM of what you're touching and what you potentially can touch.

Yes. If you were to think about it in 3 pieces, you'd say the one-off often sector or geographic client, there are more of those than there are the middle market client where we're doing more because they've now broken out and they're working -- their business models working across a broader area, investor or occupier. And then there are more of those, and then there were less of those than the first. And then there are a fewer of the big integrated outsourcings because there aren't many of those clients of that size and scale and sophistication. So we're always -- it's a broad funnel of things that we do. And we're always looking to work across all those areas and then mature. So our goal every year with every client is to drive more value to them. If that means selling more services and often does, that's great. But at the end of the day, we want our clients to think JLL drove more value for me. And then that broadens how they think about us maybe from a leasing company where they first met us to a big integrated outsourcing company.

The other topic we haven't really touched upon, I think, is competition for talent. So maybe you can give us a little bit of an update. I think there was a small idea that this will be the environment where you can pick up a lot of talent because other firms may be struggling a little bit more. Is that playing out at all? And maybe where are the biggest areas of white space where you feel like you still need to hire?

Yes. I think there's always opportunities for great people. And what our goal is to have the right strategies align with clients. We have mapped out where we think there are opportunities for the right people, the right cultural fit or for the right lateral opportunities in other ways. That -- sometimes they don't match right now as we know the talent markets broadly, not just in our client-facing people, but across everything else are really challenging. So we're out there looking for talent all the time we always have. We believe we have been and we will be a net aggregator of that talent. We have the platform that allows people to work for their clients, again, across geographies and services. We have the right culture. So we believe that we'll be a net aggregator of talent as we come out of this health and safety crisis. We're going to stay focused on growing in the areas where we think our clients need to take us. We're not the only ones probably thinking about some of these sectors and areas. So there's always pressure on some of those. But we feel like if we get up every day and focus on our people and how they can help our clients inside of the right strategies, and over time, that's worked out pretty well for us. So we're going to continue on that being very disciplined about what we do and then making sure that our people and our clients succeed. It sounds very simple, but that's our formula.

Okay. And then just lastly, a quick follow-up again. You mentioned that there's usually you lead by service and not by fees, but you said there is some fee pressure in some areas. So maybe you can be a little bit more specific in terms of what kind of work, what kind of regions, what type of clients and to what degree you have to give into that or how often you actually have to walk away from something?

Yes. There's a -- there are times when clients are looking for lowest fee, not the highest value, and that may not be a good match for us in our business in a certain area. Our focus is to drive the most value at all levels of our organization. And I think over time, we -- and we're not the only ones, but that's our focus on what we're trying to do. So if you want quality outcomes, we think we should be on the list and actively considered. It doesn't mean that there's not some fee pressures around certain things. Typically, the way we try to approach it is, let's get to that next level of value. So how do we bring things together and it says why One JLL is so important in helping clients formulate strategies and do things that will help them get to better strategies and better outcomes. And they're much more willing to then say we understand that you're often paid by the services that you execute in addition to helping us. So let's stay ahead with our clients and help them grow and help us grow, and we think it mutes some of the pressures around pricing because clients will pay for value. I found that over many years.

But no specific areas to point to?

No.

Next questions are from Sarah Obaidi of KBW.

My first question is, are you seeing or do you expect to see any impact to the market based on what is going on with China, including Evergrande as well as recent power outages at numerous factories?

Can you say that one more time, Sarah, I'm sorry?

Sorry. Are you seeing, or do you expect to see any impact to the market based on what is going on with China, including Evergrande as well as recent power outages at numerous factories?

Yes. Thank you. That's a good and topical question. At the macro level, we don't think it will impact China's growth story, really transforming from fast growth to quality sustainable growth, and we don't think it will affect our business. Remember that Evergrande share in China's residential sale market is only about 4%. In terms of our business and our growth strategy there in that business, that's been primarily targeting the new economy such as the tech sector. So this is mostly aligned with China's growth strategies. I talked about JLL's focus on commercial real estate means that our businesses and exposure to development focus, residential for sale real estate companies is really very limited. We're optimistic about China overall and their growth. That's been a big part of our strategy for a long time. We don't feel that those challenges are a challenge for us as we go forward.

Got it. And my next question is, on the margin and operating expense side, have you started to see a normalization in costs such as marketing and travel and entertainment? Sorry?

Yes. Good question. We've seen some signs of normalization here as we get into the second half as we're able to travel more, although there have been some ebbs and flows, obviously, with shutdowns in certain areas around the world. We expect that costs related to investments in people, travel and marketing, which will help maximize our revenue growth during the recovery. We expect them to come back into our cost base over time, although not likely back to pre-pandemic levels on a percentage basis in the near term.

Okay. And conversely, are there any areas of spend where you anticipate permanent savings? And if possible, could you quantify?

We're committed to operating more efficiently, and we continue to invest in our strategic priorities and growth initiatives that we believe will drive both top line growth and then operational efficiency over the long term. So that focused on finding operational efficiency was here before. It's here now. And I think it will always be there as we look at where we need to invest and then where we need to get better. We're -- our goal is to get better across everywhere as long as it serves our people and our clients the right way, get us to better outcomes.

I think we've gotten through the sell-side analysts. So we're going back to Tony Paolone of JPMorgan who has some additional questions.

I have a couple of follow-ups here. So Greg, one of the things that you kicked off with was your background from Staubach and you also made some comparisons to the HFF deal. Just wondering how you think about M&A, the ability to engage, say, like a traditional leasing firm. How difficult is that to do these days? Just -- would be curious to hear about your experience and thoughts there.

I mentioned in my earlier comments, Tony, that there's statistics and papers written about if you don't have cultural alignment, it's like very high probability failure. So with JLL and Staubach, we have very high cultural alignment around team and client and making sure that our people were there. You saw the same thing with HFF. If you're going to do scaled opportunities and try to integrate it over an existing operating business to get to a better, in our case, One JLL, you better have those elements. High-quality people, great reputation for them and a desire to go on their journey where clients are going. And when we've done that, we've been really good at it. We integrate people all the time, lateral groups, individuals. We bring in a lot of people from out of industry that have really great expertise in areas take some of the sectors. We brought in people with very deep life sciences experience who really don't have a lot of real estate experience, and we're surrounding them and bringing them together on those common goals. So any time you change your team, you have a team, you add someone to it, it changes the dynamic a little bit. But if the foundational way that they believe is right and they're focused on the clients and people, it can work. And we work very hard at that up and down our leadership teams, but also at the grassroots level, making sure that we're bringing people together on everything in every moment. But if we're doing something, there's deep integration plan. I think we've gotten a lot better at that over the last few years because we see it as a really critical way as we go forward to continue to grow our skill sets, which is where we need to be able to help our clients.

Do you think there's anything in your domain when you look across your geographies and businesses where you feel like a bigger investment would be helpful in terms of driving share growth beyond just organically doing some hiring and taking share that way?

We have a very -- this is one of the advantages of looking at the segments now more globally. We always did. But now it's very formal working across the geographies driving best practices out and getting to the granular work of where do we need more expertise and depth and then making ensure that we're executing that. As you do that, you start to generate more opportunities that flow in the city in a region and across the globe, and that creates a flywheel of good opportunity to come to our people. So -- and that allows you to recruit the tap and retain folks. So we're very focused on it day to day. We have plans. We're constantly looking at it. We're looking at shifts. Sometimes you get hit with something out of the blue like COVID and you have to retrench and then you figure out how we can go forward. That's what we've been doing for the last 1.5 years. I think our results in the second quarter showed some positive results in our areas. We feel pretty good about July and August. So let's see how it goes. I think there's still be some fits and starts, but we feel pretty good about where we are and then the discipline -- foundational discipline that you have to put in place to be able to make businesses at scale across these areas really work.

Great. It appears that there are no further questions, so we'd like to thank everybody for joining us. Thank you, Greg, for taking the time to speak with our investors and analysts.

Thanks, Chris.

And we wish everybody a terrific day.

Thanks, everyone.