CBRE Closes on JCI's Workplace Solutions Unit

LOS ANGELES—CBRE Group Inc. has closed on its previously announced acquisition of the Global Workplace Solutions business of Johnson Controls Inc. First announced in March as a $1.475-billion acquisition, the addition creates what CBRE sees as an integrated platform able to meet the full spectrum of occupier needs.

“It's not about size, it's about scale advantage,” Bill Concannon, CEO, Global Workplace Solutions, tells GlobeSt.com. It's also about what John Murphy, formerly president of GWS under JCI's ownership and now the unit's COO, calls “very strong complementary aspects” between the two formerly separate platforms. Murphy's GWS team is adding more than 14,000 employees to CBRE's global base.

For one thing, there is comparatively little overlap between GWS' core strengths and those of CBRE's occupier outsourcing business line, for which Concannon also served as CEO prior to the GWS integration. As Murphy told GlobeSt.com earlier this year, while the GWS platform under JCI's ownership was strong in integrated facilities management, “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,” he added. “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.”

Each platform separately was stronger in a geography where the other had less of a presence. CBRE is stronger in the Americas, while JCI has had a greater presence in Europe as well as Asia Pacific, Murphy says. Both Concannon and Murphy also cite the cultural fit between the two organizations.

For clients of both platforms, the biggest change resulting from the integration will be a greater ability to work with them across the life cycle of their real estate requirements, says Murphy. Those requirements will change over time, and a client's top priorities today may not be the same a few years from now. “We'll have expertise at the building level, in the business, of the business,” says Concannon.

As previously announced, CBRE and Milwaukee-based Johnson Controls have forged a 10-year strategic relationship, with CBRE providing the company a full suite of integrated corporate real estate services on more than 50 million square feet of real estate. For its part, Johnson Controls has joined CBRE's network of suppliers and partners on the strength of its building efficiency platform, and will offer its lowest available commercial-pricing on HVAC, building automation, security, fire and related services to CBRE clients and CBRE-managed properties, which total about five billion square feet globally.

In announcing the sale of its GWS unit, Johnson Controls says its expects its agreement with CBRE to provide it with up to $500 million of additional annual incremental revenue. The two companies will also jointly fund a building innovation lab to advance a new generation of workplace solutions to help clients attain their performance goals, at a cost of $40 million over 10 years.