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Matt Astrachan: JLL's Perspective on Top Ten CRE Global Trends for 2016

Matt Astrachan shares with you JLL's perspective on the top ten global CRE trends of 2016.

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Top 10 Global CRE 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
Copyright © JLL 2016 - Corporate Solutions2
Greatest risks to business over
the next 6-12 months
Impact of cyber attacks increased

(Oct 2014 - Oct 2015)
110010
100110
101010
100011DoS
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
Copyright © JLL 2016 - Corporate Solutions3
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
Copyright © JLL 2016 - Corporate Solutions4
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%
Bettermental function
and memory
Productivity increases
from better lighting
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
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
Copyright © JLL 2016 - Corporate Solutions5
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
Copyright © JLL 2016 - Corporate Solutions6
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
ENERGYACTION
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
Ad

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Matt Astrachan: JLL's Perspective on Top Ten CRE Global Trends for 2016

  • 1. Top 10 Global CRE 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
  • 2. Copyright © JLL 2016 - Corporate Solutions2 Greatest risks to business over the next 6-12 months Impact of cyber attacks increased
 (Oct 2014 - Oct 2015) 110010 100110 101010 100011DoS 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
  • 3. Copyright © JLL 2016 - Corporate Solutions3 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
  • 4. Copyright © JLL 2016 - Corporate Solutions4 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% Bettermental function and memory Productivity increases from better lighting 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 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
  • 5. Copyright © JLL 2016 - Corporate Solutions5 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
  • 6. Copyright © JLL 2016 - Corporate Solutions6 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 ENERGYACTION 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
  • 7. Copyright © JLL 2016 - Corporate Solutions7 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
  • 8. Copyright © JLL 2016 - Corporate Solutions8 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
  • 9. Copyright © JLL 2016 - Corporate Solutions 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) 9 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
  • 10. Copyright © JLL 2016 - Corporate Solutions10 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 PE O TECHNO PR C 33% need training to understand proper usage and application of data and analytics 31% have trouble accessing data necessary to make decisions 28% Today
  • 11. Copyright © JLL 2016 - Corporate Solutions11 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
  • 12. Copyright © JLL 2016 - Corporate Solutions Implications and Key Recommendations 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
  • 13. Contact us Tom Carroll Head of EMEA Corporate Research Tom.Carroll@eu.jll.com +44 (0)20 3147 1207 Marie Puybaraud Global Head of Corporate Research Marie.Puybaraud@eu.jll.com +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 Karen.Williamson@eu.jll.com +44 (0)20 3147 1197 Richa Walia Senior Analyst – EMEA Research Richa.Walia@eu.jll.com +44 (0)20 3147 1861