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LOS ANGELES—CBRE Group's agreement to acquire the Global Workplace Solutions unit of Johnson Controls Inc. for just under $1.5 billion in cash will create a facilities management powerhouse overseeing nearly five billion square feet of corporate real estate globally. To Bill Concannon, CEO of CBRE's Global Corporate Services business, and John Murphy, president of GWS, it's a melding of complementary capabilities as well as complementary strengths and limitations. GlobeSt.com spoke with Concannon and Murphy, who will join CBRE as COO of GCS when the deal closes later this year, to learn more about what will make the combination tick.

GlobeSt.com: From the viewpoints of CBRE and JCI, what made this combination seem like a good fit?

Bill Concannon: We've been in the global corporate services business for 25 years, and building out a global platform takes a long time. The strategic rationale for the GWS business was, first and foremost, that I don't think there's any other asset like it globally today. When JCI made the decision that they were going to divest the GWS platform, we worked very hard to present our company in the most favorable light.

CBRE has a full suite of services around transactions, projects and facilities management, and the GWS business is very deep in technical IFM—integrated facilities management. The business models are very similar, and there is very little client overlap. JCI's business is large in Europe and larger in Asia Pacific, while CBRE is very large in North America. Probably the most compelling aspect is the cultural fit, with leaders like John who will become significant executives within CBRE.

John Murphy: Our strategic rationale was very clear. While we always felt we were best of breed in IFM services, we also knew that we had a very substantial gap in capabilities beyond IFM. Providing our clients a set of integrated services that go beyond our core of IFM and technical and engineering services was a gap we knew we'd have to fill at some point. With CBRE, we saw the complementary capabilities of products and services, the geographic fit and the client base. We're very big in mission-critical verticals like technology and oil and gas, which complements very well CBRE's strengths in markets like healthcare and financial services. So in virtually every strategic dimension that was important to us, the fit between CBRE and GWS was outstanding.

GlobeSt.com: Once the deal is finalized, it seems likely that there will be a certain amount of alignment and integration taking place. Is that an accurate statement?

Concannon: Yes, we just signed the definitive agreement, and there will be a process we'll go through to get to close. One of the things CBRE has gotten really good at over the years, going back to our acquisition of Trammell Crow in 2006, is having a “best athlete” approach to marbling the talent on both sides and putting in place the go-forward leadership of the organization. John runs a business of 16,000 people in 50 countries, and those 16,000 will come together with CBRE's workforce in this business.

This will take place like any large integration. You have integration leaders who have been specifically tasked with the product side of the organization and developing the leadership teams, and we'll take this to the market in a way that our customers are crystal clear that they're getting an enhanced service and enhanced capability from the combined company.

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Murphy: It's always difficult to integrate, but if we were coming at this with distinctly different operating models, it would be even more so. The fact that we're starting from a pretty similar point is going to help be a catalyst for that.

GlobeSt.com: CBRE and JCI also announced that they have entered a strategic relationship around CBRE's integrated corporate real estate services and JCI's building efficiency products. How will this complement the combination of GWS and GCS?

Murphy: The kinds of building efficiency services that JCI provides are part of our scope anyway, for both the GWS business and Bill's GCS business. In those instances, especially where JCI products are installed at that client's site, our clients typically like the idea of the OEM being the service provider for those products. So this is great for our clients, and great for JCI's Building Efficiency business as well. Also, CBRE and JCI will jointly fund a $40-million innovation lab for building efficiency.

Concannon: There's also a desire on the part of our large customers to not just have skilled technical expertise at the building level, but for companies like ours to put the tools into the hands of our technicians that will make them more productive and efficient. If we can do that, that's an advantage for our customers. What we'll be doing is changing the market, and that's very exciting.