jll’s perspective on top 10 global corporate real estate (cre) trends for 2016
TRANSCRIPT
Top 10 Global CRE Trends for 2016
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CORPORATE SOLUTIONS RESEARCH
Threats
Ownership
Convergence
M&A
Experience
Coworking
Digital Drive
Data Intelligence
Sustainability
Cities of the Future
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)
110010100110101010100011DoS
18%increase inaverage impact of cyber attacks
56%increase in politically motivated cyber attacks
100%increase incriminal 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 situationin 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 marketssince 2012, however
41 countries (out of 102) have low transparency or are opaque
Threats:Security, risk and transparencyElevated geopolitical risk, security concerns and volatility will impact CRE policies and strategies
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
ImprovePEOPLE productivity
ImproveBUSINESS productivity
ImproveWORKPLACE productivity
ImproveASSET 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 servicesintegration
40%
19%
25%
HR
22%increase inprofitability
21%increase inproductivity
Convergence:HR, IT (digital solutions) and CRE strategies convergeCloser integration between Human Resources and Real Estate as CEOs demand performance
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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 functionand memory
Productivity increasesfrom better lighting
Productivity increasesfrom better ventilation
Productivity increasesfrom individualtemperature control
More productiveworkers in daylight
Happy employees have, on average, 31% higher productivity;their sales are 37% higher - their creativity is three times higherSource: 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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Digital Drive:Technology transforms organisations, Real Estate and PEOPLEThe 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 billionSource: 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 Computers2004 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 Solutions
Sustainability:Building a sustainable future for CREWith 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
COP21LIMITING 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 fromthe C-suite to drive the corporate
sustainability/CSR agenda
Source: JLL Global Corporate Real Estate Trends 2015
Coworking
Retro
fitex
istin
gas
sets
Inte
llige
nt b
uild
ing
syst
ems
Zero energy buildingsVirtual workmodel
Improve operationalperformanceFlexible building
design
Harness big data
Collaborativeworking
Renewableenergy use
Live work campuses
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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 CREleaders 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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M&AM&A is business as usual for CREWith 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 5Start 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
MITIGATERisks
OPTIMISECosts
ACCELERATEOperationalStrategy
ENSURESuccessfulIntegration
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
Coworking for corporatesCorporate clients are 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 to3,400 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
InternalCollaborationInternal coworking for employees only
CoworkingMembershipExternal coworking membership for employees only
ExternalCoworking Space
Collaboration space for employees shared with external organisations/individuals in an external coworking environment
InternalCoworking SpaceInternal coworking space open to organisations/individuals
10 Copyright © JLL 2016 - Corporate Solutions
Data Intelligence:Data & Analytics are transforming decision makingIntegrated 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 tomeasure insights Top constraint hindering CREfrom 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
11 Copyright © JLL 2016 - Corporate Solutions
Cities of theFuture:New urban hubsare boosting CREopportunities26% of firms with revenueabove US$1 billion, basedin ‘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 • SingaporeEmerging World Cities
New World CitiesMunich • Oslo • Vancouver
Barcelona • Denver • Brisbane
FutureChallengers
SeoulSydneyToronto
NearlyEmergedShanghai
Beijing
CompetitiveMegacities
IstanbulKuala Lumpur
TaipeiMexico City
Agile Higher-Quality Emerging
ShenzhenGuangzhou
DubaiBangalore
High Potential/Weakly Governed
MumbaiManilaJakarta
LaggingMegacities
DhakaLagos
Karachi
Implications and Key Recommendations for CRE
Portfolio:
IMPLICATIONS KEY RECOMMENDATIONS
Workplace:HR and CRE convergencemeans User Experience isbecoming preeminent
Strategy:Digital transformation is changing corporate strategy AND the form and function of Real Estate
Platform:CRE processes andskills need to evolveto meet emergingchallenges
Reevaluate...your footprint and increase its flexibility to manage volatility and change
Redesign...your workplace to improveuser experience andproductivity
Digitize...your processes andplatform to meetthe expectations oftomorrow
your CRE strategy toalign with new operationalrealities and enhancesustainable growth
Increasingly fluid portfolios are calling for dispersed, diverse Real Estate
Redefine...
12 Copyright © JLL 2016 - Corporate Solutions
Contact us
Tom CarrollHead of EMEA Corporate [email protected]+44 (0)20 3147 1207
Marie PuybaraudGlobal Head of Corporate [email protected]+33 (0)632 879 748
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IF YOU WOULD LIKE TO DISCUSS FURTHER, PLEASE CONTACT US
Karen WilliamsonAssociate Director – EMEA [email protected]+44 (0)20 3147 1197
Richa WaliaSenior Analyst – EMEA [email protected]+44 (0)20 3147 1861