In a World of Machine Learning, You Need to Scoop Up Expertise
CRE companies are acquiring other firms and their know-how for a reason.
JLL announced on Wednesday that it had “acquired Metropolitan Valuation Services (“MVS”), one of the largest independent commercial property appraisal and real estate consulting firms in the greater New York metropolitan area.”
The company noted that the acquisition adds 20 valuation experts to JLL’s existing 10, with MVS adding strength in “multi-housing, CBD and suburban office buildings, industrial/warehouse and shopping/retail properties, land, property transfers and market rent studies and appraisals for HUD section 8 properties” in the tri-state area.
The potential also extends beyond having additional experienced personnel in a hot and important CRE market. In the current tech-infused real estate industry, the real edge will be what a company knows.
JLL renewed its customer contract with mortgage automation and decision system vendor SpaceQuant in June. “SpaceQuant’s capability to extract, standardize, and analyze data from property financials, combined with automated reconciliations and analyses, has already transformed our operations,” Fernando Salazar, director of asset management at JLL, said in prepared remarks at the time.
Having third-party data can be critical in automating processes and ensuring more insightful analysis. However, as is true anywhere technology is used, having software, hardware, or data isn’t enough. Competitors typically can acquire the same thing unless a business owns its own data and know-how … or buys another firm and potentially takes that expertise off the market.
Businesses want an edge, and that means having or doing something in a way that competitors can’t easily duplicate is important. The most fundamental capability is knowledge. Code can be duplicated or emulated. But knowledge and data/? That takes much longer to acquire and digest.
The industry saw similar activity when AXCS Capital bought George Smith Partners in mid-June. The former is an absolute newcomer, with its incorporation in the first quarter of 2022. George Smith, on the other hand, has been in business for 35 years, according to the company, and is well known for capital provision, structured financing services, fee-based advisory services, and expert witness litigation support. It has experience in hotel and resort, industrial, office, senior housing, medical office, land development, SFR, multifamily, and retail.
It would be surprising for a company like JLL, which has an active VC arm, to not have ambitions to own the systems it runs on and to bolster them with insight that it hopes to keep from other companies.