by Brianna Crandall — April 13, 2015—CBRE Group announced last week that it has entered into a definitive agreement to acquire the Global WorkPlace Solutions (GWS) business of Johnson Controls, highlighting a corporate trend towards outsourcing FM services. GWS provides integrated facilities management solutions for major occupiers of commercial real estate and has significant operations around the world.
GWS will operate as part of CBRE’s Global Corporate Services (GCS) business, which has reportedly increased revenue at a double-digit compound annual growth rate over the last decade, as more major corporations and other institutions outsource their real estate services. When the transaction is completed, the full range of combined occupier services — notably including CBRE’s leasing expertise and GWS’s engineering expertise — will be available to the clients of both companies.
CBRE and Johnson Controls also announced a 10-year strategic relationship. CBRE will provide Johnson Controls with a full suite of integrated corporate real estate services (including facilities management, project management and transaction services) on more than 50 million sq. ft., and Johnson Controls will offer a factory-direct relationship on heating/ventilation/air-conditioning (HVAC) equipment, building automation systems and related services to CBRE for its managed properties. In addition, the companies will jointly fund an innovation lab that will develop leading-edge energy management solutions to lower costs and enhance their clients’ work environments. The joint innovation lab will evaluate, connect and leverage products, services and energy data to create value for occupiers and investors of real estate.
“Clients are increasingly asking us for fully integrated real estate and facilities solutions, which includes self-performing building technical services across their global portfolios,” said Bill Concannon, chief executive officer, GCS for CBRE. “GWS will further improve our ability to serve clients in more than 50 countries with a market-leading capability in all services, industry sectors and property types. The GWS team is a great fit for our business. They bring leadership and expertise in many areas that are vital to our clients, including engineering excellence, global supply chain management, mission-critical facilities and energy management.”
Johnson Controls Global WorkPlace Solutions (GWS) serves a blue-chip roster of global corporations, particularly in the industrial/manufacturing, life-sciences, and technology sectors. Approximately 16,000 employees ensure business continuity for the 1.2 billion square feet of real estate that the company manages in 55 countries. Clients typically purchase these services under five-year contracts, and the average tenure for GWS’s 50 largest clients is 12 years, says the company.
Upon closing, John Murphy, GWS’s president, will join CBRE as global chief operating officer, GCS. Murphy noted that the fit between the two organizations, including culture, values, a client-centered ethos, and commitment to engaged and empowered employees, is “outstanding.” Together, CBRE and GWS will manage nearly 5 billion sq. ft. of real estate and corporate facilities globally, including 2.3 billion sq. ft. in the Americas; 1.2 billion sq. ft. in Europe, the Middle East and Africa (EMEA); and 1.4 billion sq. ft. in Asia Pacific.
CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is said to be the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). Excluding affiliates, the company has more than 52,000 employees and serves real estate owners, investors and occupiers through more than 370 offices worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting.
