Jll perspective on top 10 global cre trends 2016 final by Jones Lang LaSalle Spain

CORPORATE SOLUTIONS RESEARCH

Top 10 Global CRE Trends for 2016

Threats

Convergence

Experience

Digital Drive

Sustainability

Ownership

M&A

Coworking

Data Intelligence

Cities of the Future

Impact of cyber attacks increased (Oct 2014 - Oct 2015)

Greatest risks to business over the next 6-12 months

29%

increased global and regional political instability

Threats: Security, risk and transparency Elevated geopolitical risk, security concerns and volatility will impact CRE policies and strategies

24%

increased volatility in commodities and curencies

100%

increase in increase in increase in politically average impact criminal targeted of cyber attacks motivated cyber attacks attacks

Balancing risk and transparency

23% economic and political situation in the Eurozone

Transparency improved in over

18%

since 2012, however

80% of markets

slowing growth in key emerging markets timing and pace of interest rate rises in the US Source: Capital Confiedence Barometer, EY October 2015

56%

Source: Control Risks, RiskMap 2016

18%

110010 100110 101010 DoS 100011

41 countries (out of 102) have low transparency or are opaque Source: JLL Global Real Estate Transparency Index 2014

High expectation from C-suite to improve worker productivity Improve ASSET productivity 8%

31%

61%

Improve WORKPLACE productivity 4% 20%

76%

Improve BUSINESS productivity 8%

32%

60%

Improve PEOPLE productivity 8%

32%

60%

No expectation

Moderate expectation

High expectation

Base: 277 respondents Source: JLL Global Corporate Real Estate Trends 2015

Convergence: HR, IT (digital solutions) and CRE strategies converge Closer integration between Human Resources and Real Estate as CEOs demand performance

HR and CRE integration is increasing

Impacts of high level of employee engagement

34%

Frequent interaction but separate divisions

40%

21%

6% 19% Current

increase in productivity

In 3 years

Source: Capital Confiedence Barometer, EY October 2015 Copyright ÂŠ JLL 2016 - Corporate Solutions

increase in profitability

25%

Shared services integration

22%

36%

Ad-hoc/project basis

Source: JLL Global Real Estate Transparency Index 2014

76% of respondents from JLLâ&#x20AC;&#x2122;s Global Corporate Real Estate Survey, report high expectations from leadership to enhance workplace experience over the next three years

10-25% Better mental function and memory

Productivity increases from better lighting

Source: WGBC, The Business Case for Green Building

Experience: Its all about User Experience (UX) CRE & FM will continue to enhance user experience

11%

23%

Productivity increases from better ventilation

Productivity increases from individual temperature control

More productive workers in 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

Wellness and Well-being

Source: JLL, WGBC Health, Wellbeing & Productivity in Offices: The next chapter for green building 2014 Copyright ÂŠ JLL 2016 - Corporate Solutions

18%

Note: Operational cost and productivity benefits of LEED certified buildings

Building design features that are known to have positive impact on the health, wellbeing and productivity of office building occupants

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 *design based on the concept there is an instinctive bond between human beings and other living systems and the wider natural environment

By 2020, total mobile subscription is expected to reach 9.2 billion Source: Ericsson Mobility Report

Wearables Smart TVs Number of devices in use (in billions) by 2018

“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.”

The Internet of Things

Google Executive Chairman Eric Schmidt

Tablets

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

Smartphones Personal Computers 2004

2018

Source: HBR – “Digital Ubiquity How Connections, Sensors and Data Are Revolutionizing Business”

Implications Organisation Human cloud, dispersed, mobile, embedded culture of outsourcing

Building Smart, cost effective, efficient, attract smart talent

Workplace Productive, flexible, virtual collaboration, coworking, on demand workplace

COP21

LIMITING GLOBAL WARMING TO BELOW 2˚C THIS CENTURY

ENERGY ACTION AND EFFICIENCY

RENEWABLE ENERGY

CARBON PRICE

INNOVATION

EMISSION REDUCTION

Commitments To Action Source: http://climateaction.unfccc.int/cooperative-initiatives

51% 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

Renewable energy use

With COP21 setting ambitious goals for sustainable real estate, our industry will need to respond with aggressive operational and strategic plans

Improve operational performance Collaborative working

Coworking Flexible building design

Building a sustainable future for CRE

Live work campuses Zero energy buildings Virtual work model Harness big data

Retrofit existing assets

Sustainability:

Intelligent building systems

CRE Response:

The criteria for deciding whether to lease or own real estate will be re-examined by large corporations

Lease accounting standard

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

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

Source: JLL,Global CRE Trends 2015

OWN vs LEASE 7

Corporate disposals reach highest point in

8 years

Source: JLL, Raising Capital From Real Estate, 2015

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 How?

MITIGATE

OPTIMISE

ACCELERATE

ENSURE

Risks

Costs

Operational Strategy

Successful Integration

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

Turning your real estate into a factor of success:

Start thinking about RE at the earliest opportunity

Manage confidentiality requirements

Build a RE solution fully aligned with the acquisition strategy and objectives

Adopt an integrated approach and resource appropriately

Speed is crucial to maximise value

Source: JLL Successful M&A: capturing value through real estate 2015, Intralinks Deal Flow Predictor 2015

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

Coworking for corporates Corporate clients are embracing coworking to drive innovation and growth and meet CRE strategic plans (reducing footprint + increasing employees satisfaction and growth)

Internal Collaboration

Coworking Membership

Internal Collaboration

Internal coworking for employees only

External coworking membership for employees only

Collaboration space for employees shared with external organisations/ individuals in an external coworking environment

Internal coworking space open to organisations/ individuals

Source: JLL

57% of respondents surveyed globally will enhance their company's data gathering capabilities (over the next 1-3 years)

56 %

Use of data and analytics Aspiration vs Reality 2017

Addressing gaps in people and process is critical

28 %

Today

52% Data Intelligence: Data & Analytics are transforming decision making

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

Integrated business intelligence will optimise CRE performance

33% need training to understand proper usage and application of data and analytics

31%

have trouble accessing data necessary to make decisions

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

Having the right people, process and technology in place fundamentally drives data and analytics

26% of firms with revenue above US$1 billion: based in Emerging world cities will transform CRE portfolio strategy, potentially reaching 50% by 2015

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

Established World Cities – ‘The Big Six’ New York • London • Paris Tokyo • Hong Kong • Singapore Future Challengers Seoul Sydney Toronto

Nearly Emerged Shanghai Beijing

Emerging World Cities

Competitive Megacities Istanbul Kuala Lumpur Taipei Mexico City

Source: JLL Globalisation and Competition: The New World of Cities 2015

Agile HigherQuality Emerging Shenzhen Guangzhou Dubai Bangalore

New World Cities Munich • Oslo • Vancouver Barcelona • Denver • Brisbane High Potential/ Weakly Governed Mumbai Manila Jakarta

Lagging Megacities Dhaka Lagos Karachi

Implications and Key Recommendations for CRE IMPLICATIONS

KEY RECOMMENDATIONS

Portfolio: Increasingly fluid portfolios are calling for dispersed, diverse Real Estate

Workplace: HR and CRE convergence means User Experience is becoming preeminent

Reevaluate... your footprint and increase its flexibility to manage volatility and change

Redesign... your workplace to improve user experience and productivity

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

Digitize... your processes and platform to meet the expectations of tomorrow

Redefine... your CRE strategy to align with new operatonal realities and enhance sustainable growth

Borja Basa Managing Director Corporate Solutions Borja.Basal@eu.jll.com +34 91 789 11 00

Carlos Carbajo Head of Transactions Management Corporate Solutions Carlos.Carbajo@eu.jll.com +34 91 789 11 00

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