JLL’s perspective on top 10 global corporate real estate (CRE) trends for 2016

JLL’s perspective on top 10 global corporate real estate (CRE) trends for 2016

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  Top 10 GlobalCRE Trends for 2016 CLICK ON THE ICONS ABOVE FOR MORE INFORMATION CORPORATE SOLUTIONS RESEARCH Threats Ownership Convergence M&A Experience Coworking Digital Drive Data Intelligence Sustainability Cities of the Future
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  2 Copyright ©JLL 2016 - Corporate Solutions Greatest risks to business over the next 6-12 months Impact of cyber attacks increased (Oct 2014 - Oct 2015) 110010 100110 101010 100011 DoS 18% increase in average impact of cyber attacks 56% increase in politically motivated cyber attacks 100% increase in criminal targeted attacks Source: Control Risks, RiskMap 2015 Balancing risk and transparency 29% increased global and regional political instability 24% increased volatility in commodities and curencies 23% economic and political situation in the Eurozone 18% slowing growth in key emerging markets 6% timing and pace of interest rate rises in the US Source: Capital Confiedence Barometer, EY October 2015 Source: JLL Global Real Estate Transparency Index 2014 Transparency improved in over 80% of markets since 2012, however 41 countries(out of 102) have low transparency or are opaque Threats: Security, risk and transparency Elevated geopolitical risk, security concerns and volatility will impact CRE policies and strategies
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  3 Copyright ©JLL 2016 - Corporate Solutions Source: JLL Global Corporate Real Estate Trends 2015 Source: Gallup, How Employee Engagement Drives Growth 2013 High expectation from C-suite to improve worker productivity Improve PEOPLE productivity Improve BUSINESS productivity Improve WORKPLACE productivity Improve ASSET productivity 4% 8% 8% 8% 20% No expectation 31% 32% 32% 76% 61% 60% 60% Moderate expectation High expectation Base: 277 respondents Source: JLL Global Corporate Real Estate Trends 2015 Impacts of high level of employee engagement HR and CRE integration is increasing Current In 3 years 34% 6% 36% Ad-hoc/project basis Frequent interaction but separate divisions Shared services integration 40% 19% 25% HR 22% increase in profitability 21% increase in productivity Convergence: HR, IT (digital solutions) and CRE strategies converge Closer integration between Human Resources and Real Estate as CEOs demand performance
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  4 Copyright ©JLL 2016 - Corporate Solutions Source: JLL, WGBC Health, Wellbeing & Productivity in Offices: The next chapter for green building 2014 *design based on the concept there is an instinctive bond between human beings and other living systems and the wider natural environment Experience: Its all about User Experience (UX) CRE & FM will continue to enhance user experience 76%of respondents from JLL’s Global Corporate Real Estate Survey, report high expectations from leadership to enhance workplace experience over the next three years 10-25% 23% 11% 3% 18% Better mental function and memory Productivity increases from better lighting Productivity increases from better ventilation Productivity increases from individual temperature control More productive workersin daylight Happy employees have, on average, 31% higher productivity; their sales are 37% higher - their creativity is three times higher Source: https://hbr.org/2012/01/positive-intelligence Look and feel, sensory triggers Quality views and Biophilia,* noise and acoustics Interior layout and active design, access to amenities Indoor air quality, day lighting and lighting, thermal comfort Building design features that are known to have positive impact on the health, wellbeing and productivity of office building occupants Wellness and Well-being Source: WGBC, The Business Case for Green Building Note: Operational cost and productivity benefits of LEED certified buildings
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  5 Copyright ©JLL 2016 - Corporate Solutions Digital Drive: Technology transforms organisations, Real Estate and PEOPLE The ubiquity of digital and third platform technology will have a profound impact on real estate and its users By 2020, total mobile subscription is expected to reach 9.2 billion Source: Ericsson Mobility Report “From the dawn of civilization until 2003, humankind generated five exabytes of data. Now we produce five exabytes every two days…and the pace is accelerating.” Google Executive Chairman Eric Schmidt Number of devices in use (in billions) by 2018 The Internet of Things Tablets Smartphones Personal Computers 2004 2018 Wearables Smart TVs Source: HBR – “Digital Ubiquity How Connections, Sensors and Data Are Revolutionizing Business” Organisation Building Workplace Human cloud, dispersed, mobile, embedded culture of outsourcing Smart, cost effective, efficient, attract smart talent Productive, flexible, virtual collaboration, coworking, on demand workplace Implications
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  6 Copyright ©JLL 2016 - Corporate Solutions Sustainability: Building a sustainable future for CRE With COP21 setting ambitious goals for sustainable real estate, our industry will need to respond with aggressive operational and strategic plans Source: http://climateaction.unfccc.int/cooperative-initiatives COP21 LIMITING GLOBAL WARMING TO BELOW 2˚C THIS CENTURY ENERGY ACTION AND EFFICIENCY RENEWABLE ENERGY CARBON PRICE INNOVATION EMISSION REDUCTION Commitments To Action 51% CRE Response: 51% of respondents from the JLL Global Corporate Real Estate Trends 2015 cited growing pressure from the C-suite to drive the corporate sustainability/CSR agenda Source: JLL Global Corporate Real Estate Trends 2015 Coworking Retrofit existing assets Intelligentbuildingsystems Zero energy buildings Virtual work model Improve operational performance Flexiblebuilding design Harness big data Collaborative working Renewable energyuse Live work campuses
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  7 Copyright ©JLL 2016 - Corporate Solutions Ownership: Own vs lease in 2016? Corporate disposals are at record highs, but lease accounting will alter portfolio strategies and decision making at the board level The criteria for deciding whether to lease or own real estate will be re-examined by large corporations Source: JLL,Global CRE Trends 2015 Source: JLL, Raising Capital From Real Estate, 2015 Lease accounting standard All leases will come on to company balance sheets potentially shifting the balance toward ownership 40%of CRE leaders reported increasing demands to raise capital through the real estate portfolio Corporate disposals reach highest point in 8 years OWN vs LEASE
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  8 Copyright ©JLL 2016 - Corporate Solutions M&A M&A is business as usual for CRE With M&A volumes at record levels it is a crucial area of value of CRE Source: JLL Successful M&A: capturing value through real estate 2015, Intralinks Deal Flow Predictor 2015 How? Turning your real estate into a factor of success: 1 2 3 4 5 Start thinking about RE at the earliest opportunity Manage confidentiality requirements Speed is crucial to maximise value Build a RE solution fully aligned with the acquisition strategy and objectives Adopt an integrated approach and resource appropriately MITIGATE Risks OPTIMISE Costs ACCELERATE Operational Strategy ENSURE Successful Integration 59% of global senior executives expect to pursue acquisitions in the next 12 months The global number of announced M&A deals in Q1 2016 will be approx. 7% higher y-o-y CRE can help create value for companies throughout the M&A lifecycle
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  Coworking for corporates Corporate clientsare embracing coworking to drive innovation and growth and meet CRE strategic plans (reducing footprint + increasing employees satisfaction and growth) 9 Copyright © JLL 2016 - Corporate Solutions Source: JLL The number of coworking spaces worldwide grew to 7,800 in 2015 compared to 3,400 in 2013 The number of members using coworking space is predicted to reach 1 million by 2018 Key expectations from coworking members: Sharing Knowledge (68%), Brainstorming or sharing new ideas (60%), Sharing opportunities for new jobs or projects (55%) Source: DeskMag,The Global Coworking Survey 2015 Internal Collaboration Internal coworking for employees only Coworking Membership External coworking membership for employees only External Coworking Space Collaboration space for employees shared with external organisations/ individuals in an external coworking environment Internal Coworking Space Internal coworking space open to organisations/ individuals
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  10 Copyright ©JLL 2016 - Corporate Solutions Data Intelligence: Data & Analytics are transforming decision making Integrated business intelligence will optimise CRE performance Source: Mind the data gap: Aspiration vs. reality in corporate real estate, Forrester Consulting on behalf of JLL, 2014, JLL Global Corporate Real Estate Trends 2015 52% 56% 2017 57% of respondents surveyed globally will enhance their company's data gathering capabilities (over the next 1-3 years) Use of data and analytics Aspiration vs Reality Lack of effective data and analytics to measure insights Top constraint hindering CRE from enhancing itself as a strategic value-add Aspirations could be curtailed by current capabilities Addressing gaps in people and process is critical Having the right people, process and technology in place fundamentally drives data and analytics 33% need training to understand proper usage and application of data and analytics 31% have trouble accessing data necessary to make decisions 28% Today
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  11 Copyright ©JLL 2016 - Corporate Solutions Cities of the Future: New urban hubs are boosting CRE opportunities 26% of firms with revenue above US$1 billion, based in ‘Emerging World Cities’, potentially reaching 50% by 2025 Source: JLL Globalisation and Competition: The New World of Cities 2015 Emerging world cities will transform CRE portfolio strategy Established World Cities – ‘The Big Six’ New York • London • Paris Tokyo • Hong Kong • Singapore Emerging World Cities New World Cities Munich • Oslo • Vancouver Barcelona • Denver • Brisbane Future Challengers Seoul Sydney Toronto Nearly Emerged Shanghai Beijing Competitive Megacities Istanbul Kuala Lumpur Taipei Mexico City Agile Higher- Quality Emerging Shenzhen Guangzhou Dubai Bangalore High Potential/ Weakly Governed Mumbai Manila Jakarta Lagging Megacities Dhaka Lagos Karachi
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  Implications and KeyRecommendations for CRE Portfolio: IMPLICATIONS KEY RECOMMENDATIONS Workplace: HR and CRE convergence means User Experience is becoming preeminent Strategy: Digital transformation is changing corporate strategy AND the form and function of Real Estate Platform: CRE processes and skills need to evolve to meet emerging challenges Reevaluate... your footprint and increase its flexibility to manage volatility and change Redesign... your workplace to improve user experience and productivity Digitize... your processes and platform to meet the expectations of tomorrow your CRE strategy to align with new operational realities and enhance sustainable growth Increasingly fluid portfolios are calling for dispersed, diverse Real Estate Redefine... 12 Copyright © JLL 2016 - Corporate Solutions
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  Contact us Tom Carroll Headof EMEA Corporate Research [email protected] +44 (0)20 3147 1207 Marie Puybaraud Global Head of Corporate Research [email protected] +33 (0)632 879 748 © COPYRIGHT JONES LANG LASALLE 2016. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication. www.jll.com IF YOU WOULD LIKE TO DISCUSS FURTHER, PLEASE CONTACT US Karen Williamson Associate Director – EMEA Research [email protected] +44 (0)20 3147 1197 Richa Walia Senior Analyst – EMEA Research [email protected] +44 (0)20 3147 1861