The current environment for financial services companies is rife with regulatory shifts, competitive pressures, and digital transformations. One way these firms are driving growth, advancing technology, and enabling diversification is through a well-thought-out merger and acquisition strategy.
However, according to a recent JLL report, “Navigating M&A as a Corporate Real Estate Leader,” corporate merger and acquisition success involves more than operations and personnel. It also involves real estate assets and portfolios, meaning CRE decision-makers should also be involved at the beginning of such a process.
“Treating CRE as a strategic lever, rather than a downstream function, better positions organizations to unlock value, retain talent, and execute on growth,” Erin Haglund, JLL’s Managing Director, Financial Services, told Connect CRE. “It also allows for a seamless transition for employees experiencing the transformation and customers experiencing the new brand.”
Shifts in the Real Estate Roles
The report’s statistics noted that global M&A activity in the financial services sector “rebounded sharply in 2024.” Additionally, M&A and new markets are considered to be top corporate goals by 2030.
At the same time, “the M&A landscape in financial services remains highly regionalized,” the report said. “Across regions, real estate implications are tied closely to market maturity, regulatory outlook, and the subsector dynamics driving deal flow.”
Also regionalized? Commercial real estate. Furthermore, the position of real estate in M&As has changed.
“Real estate has long been considered an enterprise and operational cost center,” Haglund observed. “However, in recent years, the role of real estate has evolved into a strategic, value-adding partnership that is closely aligned with overall business strategies and is an integrated contributor in how those strategies are successfully forecasted and implemented.”
As such, bringing the corporate real estate leaders into the M&A due diligence process “is critical to ensure opportunities are not overlooked in a rapidly changing business paradigm,” Haglund commented. These leaders also bring plenty of expertise in asset management and liability, portfolio consolidation, market strategies, reinvestments, and post-merger cost mitigation to the table.
Given the regionalized aspect of the M&A landscape, local real estate knowledge is valuable.
Benefits of the CRE Incorporation
One hoped-for result from a successful M&A is the achievement of scale and operational efficiency. Haglund said that real estate is typically the second-largest cost for companies, making it a major consideration in the process.
“Real estate plays a pivotal role in translating M&A ambition into operational reality,” she pointed out. “A company’s facility portfolio is the physical expression of its culture and customer-facing brand.”
Then, there’s the culture aspect. “The workplace is the physical manifestation of a company’s culture and brand,” Haglund commented. “It’s where employees spend most of their time.” Bringing real estate into an M&A approach helps improve the employee experience while supporting integration between the companies. “If real estate is not a consideration, the cultural integration may be limited, and the companies could continue to feel siloed,” Haglund said.
Risks of Ignoring Buildings and Land
There are additional risks to excluding real estate from M&A activities. The report and Haglund said that merging activity can mean real estate redundancies (think overlapping offices and branches, duplicated office hubs, and poorly used assets acquired through legacy growth.
Disregarding real estate can also increase portfolio risk. Haglund said that risks can be reduced and mitigated by focusing on property liabilities, lease commitments, and asset condition.
But there’s more to the situation than cutting costs or getting rid of legacy properties that are of no use. “It also involves the positive investment opportunities that reshape the footprint to reflect the new business model, talent strategy, and customer reach,” Haglund said. “A streamlined, high-performing footprint will support a unified culture, efficient operations, and scalable growth.”
To Summarize . . .
Any M&A process should involve real estate stakeholders—on both sides. Furthermore, that involvement should take place early. How early? Haglund suggests incorporating CRE leaders at the front end of the process, before due diligence begins.
“The most successful transitions are those where real estate teams act early, collaborate cross-functionally, and approach portfolio decisions with a blend of data and future-focused vision,” she added.
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