Ahmed Basha

The coronavirus outbreak (COVID-19) Global Occupier Perspective II: (re)entry and (re)imagination Research Report I Jones Lang LaSalle Incorporated May 13th, 2020 The coronavirus outbreak (COVID-19) | 1 Contents In this report: The ‘Next Normal’ 06 Lessons Learnt 08 The Corporate Journey 12 Impact and Implications 16 re (re)imagination24 ( )entry18 Sources of information 29 Contact31 2 | The coronavirus outbreak (COVID-19) The coronavirus outbreak (COVID-19) | 3 Occupier perspective: (re)entry and (re)imagination This document highlights the impacts and implications Corporate Occupiers should consider when re-entering the workplace and reimagining their real estate strategy postpandemic. It is based on JLL’s Research and Consulting’s insights and relevant key facts from vetted sources. 4 | The coronavirus outbreak (COVID-19) “ The best time to prepare was last January. The second best time was last February. The third best is now! ” The coronavirus outbreak (COVID-19) | 5 The ‘Next Normal’ A catalyst for change office will maintain its importance for facilitating interaction and collaboration and, ultimately, for The COVID-19 crisis is ricocheting across the employee health, well-being and productivity. world, hitting the global economy harder Returning to work will mean reaching an than we’ve ever seen. The OECD’s Secretaryoptimal solution where the trust of people General Angel Gurria noted: “This is the third in their employer, their colleagues and their and most serious economic, financial and social government/state is beyond expectations. The crisis of the 21st century”. 2020 will likely be physical transformation of our environments will remembered as a year that shaped the history of be instrumental in reaching this state and crucial the world. to getting back to work. Global economic growth came to an abrupt ( )entry, operation resilience and halt in Q1; the first global quarterly contraction since 2011. While different parts of the world are the ‘Next normal’ at varying stages of dealing with the pandemic, The coronavirus pandemic has completely all global regions have seen a significant upended long-established work routines for slowdown. There continues to be a high degree many millions of people and forced companies of uncertainty for the outlook in a very fastto adopt remote working practices like never changing environment. A V-shaped recovery is before. Working from home has now become looking less likely, and JLL recommends that the norm for many people – and will be for the businesses take a scenario planning approach foreseeable future - and technology is helping whilst maintaining agility and preparedness. to keep people connected in new ways. The COVID-19 pandemic has had a sudden and Businesses will not go back to the way we knew massive impact on all aspects of people’s lives. before the pandemic, but successful firms The way we live and work is changing, and will reinvent themselves to be more resilient, some of the emerging new trends will become adapting their operational models to the ‘Next part of our ‘Next normal’. Despite the current normal’. There are four stages for companies to switch to mass remote working, the physical re 6 | The coronavirus outbreak (COVID-19) transition through - prepare, respond, ( )entry and reimagine. re The way we are all currently living and working differs vastly from this time last year, and we will need to reactivate our work and business life in different phases: an ‘initial focus’ on the health, safety and well-being of people, and on business continuity, shifting toward safely re-entering workplaces and reimagining portfolios. Heightened uncertainty are growing A sharp shock to the global economy in H1 2020 and throughout H2 2020 is expected: • Economic impact: Short and long-term impacts on economic growth, business activity and individual behavior • Real estate impact: After a wave of facilities closures (offices, factories, retail, hospitality, public buildings), governments and corporate are starting to ease restrictions and re-open the economy, business activities, facilities, production and sales. • Industry impact: Large number of industries more susceptible to the disruption (hospitality, retail, aviation, automotive) in the short term, and others experiencing a surge in demand (pharmaceuticals, biotech) • Trade impact: Severe slowdown and delays in trade flow will continue to cause short-term disruption to consumers and businesses • Workforce impact: Remote working is becoming the norm, and homeworking an integral part of the corporate response • Health impact: The coronavirus outbreak is impacting the whole world and every single individual on the planet - at home, at work, during leisure time • Governance and societal impact: There are no boundaries to the penetration of the coronavirus into our lives and environments, impacting different regions and markets in different ways. The diversity and variation in government/state policy response will sharply affect recovery profiles and corporate strategies. In the short term, businesses are likely to delay real estate decisions, slow down their activities and adjust their operations; this is significantly restricting their workforce movements and will continue to do so for several months. The search for liquidity is intensive (cost cutting and cost savings) for global occupiers. Portfolio optimization is a priority for both cost savings and the increasing demand to augment remote-working capabilities. The next phase will concentrate on ( ) entry and getting back to a BNAU (Business Not As Usual) situation. As part of this, a complex workplace and resilient portfolio model will need to be designed, implemented and operationalized to enable the ‘Next normal’. At the same time, sustained business continuity will require well-planned and well-communicated operating practices for people and for FM. re “It is about getting back to a better world” Christian Ulbrich, CEO of JLL Looking beyond the pandemic: Overall, the way we live and work is changing, and some of the emerging new trends will become part of the ‘Next normal’. Yet, many of the familiar pre- COVID-19 structural trends will be re-enforced and will continue to shape the real estate sector. These include growth in corporate outsourcing, rising capital allocations to real estate, urbanization, technology and sustainability. The coronavirus outbreak (COVID-19) | 7 Lessons Learnt The pandemic arrived during a period of faltering global growth, elevated geopolitical risk and an intensifying pushback against globalization. The crisis may exacerbate all those trends. Unlike during the GFC, there is no large-scale international coordination in response as some countries turn inward toward nationalism. There are three factors that will determine the severity of the economic downturn and which are explained in detail in our global research publication ‘COVID-19 Global Real Estate Implications Paper II’ (www.jll.com/covid-19): The severity of the isolation and social distancing measures: Nations have circumscribed social behaviors The duration for which they are in place: Only an improvement in overall public health will bring an end to the crisis The fiscal and monetary policy response: Monetary measures alone cannot immunize the real economy; they can help to limit the damage 8 | The coronavirus outbreak (COVID-19) Green shoots from China Mainland China was the first market majorly impacted by COVID-19, causing unprecedented restrictions on mobility. Two months after their introduction, China is now starting to loosen its lockdown measures. Many traditional industries are now slowly returning to normal. At the same time, others are seizing emerging growth opportunities with potential positive impacts for real estate markets. These include the digital economy, online entertainment, insurance, healthcare, and real estate technology. Office sector: The return-to-office rate varies by city with 80–100% in Shanghai and 75-80% in Chengdu and Chongqing. Leasing volumes have slowed and renewals have become the prefered choice of tenants. The ‘new economy’ appears to be faring relatively well with increased enquiries from tech companies. There is now also a more intense focus on safety. Logistics sector: The logistics sector exhibited a degree of resilience during the outbreak, with demand continuing from companies in industries such as e-commerce. Freight traffic and warehouse parks have now resumed operations. Trends such as fresh food deliveries have accelerated, while demand for cold chain logistics mayalso see a rise in demand. Capital markets: Investors are still showing strong interest in Beijing’s commercial real estate market. While the outbreak may have postponed some deals, other negotiations have been pushed through with unwavering confidence from investors. Investors are fixing their attention on the longer-term potential. For further information, please see the full report “Are green shoots emerging in Mainland China?” www.jll.com/covid-19 The countries first most impacted, China, Italy and Spain, and now France, the UK and the US, alongside countries that appear to have successfully contained transmission like South Korea and New Zealand have not yet flattened the curve. Worryingly it is now several emerging economies that are seeing a huge wave of infections – notably Brazil, Mexico, Russia. These scenarios have taught us that the readiness and responsiveness of your business and your workforce will help to mitigate the impacts (short term and medium term), ensure the protection of your people, and speed up your recovery after containment: Readiness: Speed was and is of the essence to cope with the exponential growth of the outbreak– the rise of the pandemic was akin to a tsunami. The lack of visibility of the problem itself was a real issue at the beginning, and limited knowledge about the scale of the pandemic slowed down ‘Preparedness’ despite a high level of ‘Readiness’ at a corporate level – organizations were ready but not prepared for a pandemic of this scale. Contingency planning: The need for support is high, complex and critical – specialist support is essential to Preparedness: address the complex issues that businesses have never been exposed to (supply chain, Major gaps in Preparedness of many hygiene, cleaning, personal protection…) businesses appeared at an early stage of as well as a myriad of problems that have the outbreak. As soon as the virus reached a emerged at the same time and which have business’s geographical region, immediate questions surfaced on “where do we start, what required immediate actions or short-tertm answers. should be done and how to proceed”. Rapid response: Switch to reactive mode was near immediate –the tsunami of COVID-19 and the high level of uncertainties surrounding it for 90 days forced employees, governments and organizations to take decisive actions and implement radical measures in a short amount of time. Innovation: Fast track solutions were at the beginning slow to come to the market but crowdsourcing is accelerating innovations around tech, engineering, security, hygiene and health. The mass of cross-collaboration is outstanding and China, and now Italy, have become sounding boards for experimentations and prototyping, helping to curb the next wave of outbreaks in other countries. A momentum for peer learning will improve our power to respond and control the outbreak and will help to minimize the impact of the COVID-19 on our people and our economies. The coronavirus outbreak (COVID-19) | 9 Shaping forces: MIT Sloan School of Management argues that in anticipating this new post-crisis world and seizing opportunity in adversity, we need to consider several shaping forces such as new learnings, new attitudes, new habits and new needs. We will learn more about each of these forces through the different phases of the crisis, but there are already some clear themes emerging: new ways of working and of operating real estate facilities. • • New learning – science and data are critical to navigate, manage and control an outbreak • at this scale and develop the new metrics that matter: Reading the science and the data and listening to experts is necessary to understand the outbreak and access the right data. We are firmly in a fast-data world where new and diverse data sets will enhance CRE strategy and decision-making. • • New attitudes – remote working is working and will stay with us: The crisis has shifted perceptions around the scale, effectiveness and potential of remote working. Organizations across industries have adopted 10 | The coronavirus outbreak (COVID-19) New behaviors – we can operate without an office but...: Working remotely and operating facilities with minimum services to maintain business continuity is possible and sustainable but has placed stress on individual and business performance. An office will remain a crucial central hub for the enterprise. New habits – we can collaborate remotely and learn how to do it fast: Learning to work differently and remote collaboration is challenging but essential for teams and leaders and for facilities managers and project managers. However, face-to-face cannot always be replaced by technology. New needs – technology, including workplace and real estate technology, has proven crucial to sustain business continuity at a large scale: Appropriate technology investment and strategy is now a necessity to maintain a resilient workplace and real estate strategy. The right mix of talent and technologies needs to be brought on board. A holistic approach to people and tech strategy is required at an enterprise level. • New mindset – enterprise will need to shift towards a new operating model, the ‘Next normal’: Navigating this unprecedented situation has necessitated radical shifts in thinking. Companies have had to adapt operating models overnight, with leaders innovating in real time to deliver new solutions. While some changes will be temporary, a number of lessons learned will have lasting impacts for future operating models. • New skills – a new breed of worker is emerging: the tech enabled knowledge worker, the augmented worker: COVID-19 has accelerated the rise of the augmented workplace and will require more collaboration and new skills across the organization. For real estate teams the crisis has increased their partnership with IT, HR, Finance and Legal functions. The coronavirus outbreak (COVID-19) | 11 The Corporate Journey Resilience will be crucial to recover from the outbreak. We anticipate that businesses will not go back to normal as we knew it before the outbreak, but will reinvent themselves to be more resilient, adapting their operational models to the ‘Next normal’: ‘( )entry’, ‘( )imagination’, ‘Implementation’ and ‘Flourish’ in the Enterprise of the Future. re re A complex workplace and resilient portfolio model will need to be designed, implemented and operationalized to enable the ‘Next Normal’ (with clear operating practices for people and for facilities) and to ensure sustained business continuity, safety and growth. There are several measures that will require more immediate attention (occupancy planning and real estate liquidity solutions) while also supporting remote working for your workforce (homeworking, communication plans, protection measures). Anticipating the future and reactivating your operations will require a rethink and ( )imagination of portfolio design and operations through re tactical and strategic solutions (flexspace solutions, reopening sites, deep cleaning, protection measures) to allow work to be as normal as possible. JLL has decoded the Corporate Journey. The path toward a full recovery will be complex and bumpy and will require extreme resilience and adaptability to reach a Next normal. The Corporate Journey is illustrated above. JLL COVID-19 Corporate Journey Implementation Shock Denial and disbelief ( re) alization Confront the impacts and dynamics re ( ) spond Shelter in place drives workplace closures Future-fit resiliency planning Parallel path to more resilient and adaptive future state. (re)imagination Implement the new vision Flourish Feed, nurture and cultivate – thrive A new Workplace of the Future Workplace continuity • Scale remote work program • Communication / governance • Scenario planning. (re)entry re) activate space re) spect health and wellness re) vitalize property and workplace •( •( •( Productivity challenge Improve productivity 12 | The coronavirus outbreak (COVID-19) The coronavirus outbreak (COVID-19) | 13 Stages of the Corporate Journey re)alization Shock and ( “I have taken immediate actions to help avert the crisis, but are these enough.” ( re)spond “The crisis is averted, what should I do now, the focus has shifted to survival” Broad Solutions • Cope with the immediate crisis and confront the impacts and dynamics: Understand and minimize organizational impact, ensure employee safety, well-being and health, support business continuity, occupancy planning and enterprise-wise communication initiativest • Immediate liquidity solutions and people and asset protection: Develop and deploy short term plans to stabilize business operations, ensure cash preservation, people and asset protection and remote workforce enablement Adaptation “This may last longer than I anticipated, I need to develop alternative methods to keep business operational and maintain business continuity” ( re)entry “We must start to work as soon as possible. Company is ready for employees to start coming back to the office” 14 | The coronavirus outbreak (COVID-19) • Develop alternative ways to keep business operational: Adapt real estate portfolio and workplace strategies to match evolving business eco-system paradigms in the short-medium term Stages of the Corporate Journey Productivity Challenge “The business is operational, but productivity is dropping and not all my sites are operational.” ( re)imagine “We have an opportunity to rethink our operational model and reimagine our workplace. This may mean major paradigms shifts and eco-system changes, is my organization / CRE org. ready, resilient, adaptable to thrive in the future. The transformation must start now.” • Ensure productivity for on-site and remote-workers at scale: drive remote working plan, leverage technology, deploy culture transformation and change management for a distributed and physically distanced workforce within a healthy working environment • Define post- and mid- pandemic resilient office workstyles and portfolio: Evaluate future readiness and adaptability quotient of the enterprise and the ability of CRE models to support enterprise resilience, operate healthy buildings and adjust sustainability provisions Implementation “I need to have a business and operational model more adapatable and resilient. Agility is not enough” Flourish • Determine level of modification required to return to business: Prepare, redesign, fit out workplaces to invite employees back to the office, combined with remote working capabilities Broad Solutions “What will new paradigms mean for the future of CRE? How do I position and support my organization to thrive in the future” • Implement the new vision: Outline a roadmap for portfolio transformation from interim-state to flexible / elastic future state with specific change actions, and revised set of success KPI and metrics • Feed, nurture and cultivate to thrive: Analyze impacts to workflow, workforce, and workplace mega trends to radically re-assess and develop future real estate and workplace scenarios, and embrace the ‘Next normal’ The coronavirus outbreak (COVID-19) | 15 Impact and Implications for Occupiers The level of uncertainty is currently at an all-time high with the trajectory of the recovery difficult to forecast. Although there has been no global Social distancing joined up policy response, individual countries have taken major steps to try and cushion their people and economies through this difficult period. We look to the economic outlook and policy implementations but would advise against putting too much weight on a specific-point forecast until the future pathway becomes clearer. In the real estate sector, we can see that the pandemic has accelerated some trends already in evidence, whereas other trends may reverse. For example, demand for online shopping has Change management Work from home and work increased and will likely continue, whereas the ongoing trend for the densification of work and living space is now under scrutiny. Across sectors, these trends differ, with varying implications for real estate demand. Occupiers’ priorities will focus on immediate action to protect people and assets and plan for ( )entry over the coming weeks or months: Focus areas for global organizations: Corporate Occupiers must remain agile and react quickly to this fast-changing situation. Businesses are likely to delay real estate decisions, slow down their activities and adjust re Facilities management (re)integration and (re)entry their operations, significantly impacting their workforce movement. This will likely continue to for several months. The search for liquidity is intensive, portfolio optimization a priority for cost savings and increasing demand to Disaster Declared Business Growth, Productivity, Profitability The short-term human and economic impact is undeniable as people stay home, offices and shops close and production stalls. Once the risk to human life has reduced and steps are taken back towards a fully productive economy, it is worth spending some time envisaging what this ‘Next normal’ might look like. China is offering us some visibility on what this might be. During Impact re)entry preparation ( augment remote working capabilities. The next phase will concentrate on ( )entry and getting back to a normal situation. Occupiers will increasingly seek real estate provision to sustain business continuity: re re)imagine and flourish ( Flourish Business Disruption Event Business Continuity Plans Inflection Point Next Normal Competitive Advantage Path towards new normal Traditional Path New-Old Normal Time 16 | The coronavirus outbreak (COVID-19) The coronavirus outbreak (COVID-19) | 17 (re)entry Operational resilience will be crucial to recover from the outbreak: There is currently limited visibility on when this next stage will happen. This phase is complex to navigate, requires some restructuring and Businesses will not go back to the way we knew before the pandemic but will reinvent courage from our leaders and the workforce, but it will be an interim state. Occupiers must themselves to be more resilient, adapting their operational model to the ‘Next normal’. determine the level of modification required to return to business: prepare, redesign, fit The short term impact for occupiers is out workplaces to invite employees back to significant as their business as usual activities the office, combined with remote working are impacted with changes occurring on a daily capabilities. It is not about getting back to basis. The immediate shock and realization of office as soon as possible. Rather the opposite the outbreak is over and the majority of approach. Occupiers are looking for a level occupiers are in response mode after a short of operation which is steady and focus on phase of preparation and immediate actions. business continuity. What does it take to ‘reOccupiers are now preparing for ( )entry of enter’ facilities we closed weeks ago, bring their facilities, looking at sending their people back to work and return to a stable workforce back to work. business activity? What functions must come re Prepare Outbreak shock and (re)alization (re)spond Peak Adaptation and business coutinuity (re)entry Almost there productivity challenge and (re)entry (re)imagine The ‘new normal’ (re)imagination, implementation and flourish re)entry option is available? back when the ( The situation is rapidly changing, and the ( )entry stage will focus on: .see JLL ( )entry Guide here (https://www.us.jll.com/content/ dam/jll-com/documents/pdf/other/reentryguide-for-working-in-the-next-normal.pdf) re re re • ( )activate space: Addressing how and when people should begin to return to space, and how space is structured and used once ready for (re)entry, while balancing health, safety and financial implications re • ( )spect health and wellness: Ensuring the safety, security and health of employees, tenants and visitors re • ( )vitalize property and workplace operations: Preparing properties and workspaces for safe and productive reentry in adherence with new business and social protocols, as well as government guidelines and requirements re Corporate ( ) entry check list: Workforce ‘Provide confidence it is safe to come back to work’ • Eligibility to return to work and priorities of re-entry • Critical activities and sites need to be identified Asset and people protection ‘Safety, health and wellness to remain the priority’ • Facilities Mothballing • Full protection of people and assets, hygiene solutions throughout the workplace • Limited and controlled access to sites/ workplaces to manage density and • ite proximity analysis to decrease commuting movement times • Mental Health support to ensure trust in the solutions proposed • Commuting plans and protocols to reduce virus exposures • Tracking and control measures using • Training and education program to prepare technologies, apps and real time solutions the return to work and boost their confidence • Engage and empower the workforce, and fulfill their needs • Social and physical distancing protocols • Limit sharing (technologies, equipment and tools) • Healthy building measures to improve air quality and ventilation and reduce virus spread • Reinforced hygiene and cleaning measures throughout the site • Employee and Visitor screening solutions Workstyle adaptations ‘Changing protocols and workspace design’ • Reduced workplace density to control people to people risk of exposures to the virus • Working protocols to change ways of working and habits • New protocols to reduce gatherings whilst enabling collaboration • Redesign working environment to meet social and physical distancing standard • New protocols to avoid movement and gathering of employees in one location (canteen, kitchen, toilets, lifts, breakout spaces…) • New services on site to avoid leaving the workplace during working hours • Remote working plans to sustain distance working and enable collaboration Source: JLL Research, April 2020 Source: JLL Research, April 2020 18 | The coronavirus outbreak (COVID-19) The coronavirus outbreak (COVID-19) | 19 Wider environment as important as corporate behaviour: • Clear guidance and transparency on • Increased and continuous cleaning and lockdowns and access restrictions and lifting hygiene measures of public spaces of containment measures • Tracking and control measures offered to all • Reinforced protection of public assets members of the public Actions by corporate occupiers will be only one piece of the ( )entry strategy. National and local governments will also need to • Public Transport control and management provide safe environments and clear guidance around density and crowds to employees and corporates alike. Public • Commuting measures to ease access to infrastructure must be adapted to manage sites, city centers and remote locations density, provide clean environments along with enabling tracking and control measures: • Decontamination measures through out public spaces re 20 | The coronavirus outbreak (COVID-19) • Increase Healthcare facilities and capacities • Economic measures in place • Review Governance and improve policymaking and decision-making Check list of levers to activate ( )entry: When, Who and How! 9 Fit out of the workplace – distancing, collaboration, equipment, protection measures 9 Triggers for re-opening - timing and go ahead, level of decision making andresponsibility, legal implications 9 On-site services – what should stay, what should go, what requires remodeling re 9 Triage of the sites and people – priorities, critical sites and people, define what is essential 9 Working patterns – shifts, no shifts, groups, days and nights activities 9 Commuting patterns – choice of vehicles or transport, timing, protection measures, risks 9 Continuous learning – mass and fast data input, data pulled in and data pulled out, revised key benchmarks and metrics, metrics that matter 9 Continuous education – training and learning to navigate the new situation for employees, learning new habits and understanding why it is critical to learn to “dance with virus” 9 Phasing approach – length of the reactivation phase and depth of the disruption The coronavirus outbreak (COVID-19) | 21 Occupiers must strategically prepare their buildings, space and people: 1. Promote the health and wellness of employees and visitors 2. Ensure buildings are safe, resilient and ready 3. Create and monitor effective guidelines and adjustments to your space re) entry guide to help occupiers deal with JLL has created a COVID-19 ( an endless list of questions to answer, but which focuses on critical areas re)entry plan. to create an effective and successful ( The JLL COVID-19 Resources are available at www.jll.com/covid-19. 22 | The coronavirus outbreak (COVID-19) Questions to consider: • Phasing - How soon is too soon to re-enter the workplace? What’s the right number of re-entry stages? What is the proper cadence in returning to the office? What conditions signal “all clear” for safe return to work? How should Occupiers be partnering with Landlords to understand their plans and the communal space? What role does HR, Risk, CRE and legal take in the re-entry phases? How can you get me to a lower cost model quickly? • New workplace - What does the new work space physically looks like? Do we really have to physically modify it or not? What is the right density and occupancy of workplaces? What are the right physical and social adaptations to make to the workspace? How should we define “Next normal” for employees? Are facilities in condition to be reoccupied? • Journey - What should we be thinking about in terms for the “employee journey”? How are we going to deal with the sensitivity of tenants in moving around the building? How should you address the impacts and sequencing of elevator traffic patterns in • • • • and around the building? Screening - What is appropriate for employees, customers and visitors? Where is the legal limitation for Occupiers and Landlords? What is the legal position of employees, visitors and customers? Work from Home (WFH) – How will this affect the productivity of the workforce? How do I handle request to work from home permanently? What is the level of responsibility of employers for WFH settings? What duty of care will companies have to ensure their staff are working safely and ergonomically at home? Protection – What is a clean desk policy in this new situation? What are the best practices for providing employees with PPE? What are current best practices regarding HEPA filtration filters and systems? What will be needed to make the space safe for employees to re-enter? What should our commitment to cleanliness be? Health and Wellness - What new protocols around wellbeing, mindfulness and enhancing health and safety should be introduced into the workplace? How do you explain social distancing? • • • • Services - What plans do you have in the event that we have to reduce service staff? What is the appropriate balance of maintaining sites while limiting services and access? Liquidity – What is the incremental costs versus the incremental saves of shelter in place? How much will it cost to get a COVID-19 proof workplace per head or per square meter? Talent – Do we have the right talent on board? How do we fast track training on specialist services and protocols? How can productivity be sustained/increased from current levels? Communication: What should be communicated to employees and how (key messages, tone of voice, means of communication? The coronavirus outbreak (COVID-19) | 23 (re)imagination Although the COVID-19 pandemic is first and foremost a human concern there are secondary effects that are filtering through the economy and real estate sector that may be with us to stay. The way we are all currently living and working vastly differs from this time last year – which of those changes will become part of our ‘Next normal’ following relaxation of the lockdowns remains to be seen. The COVID-19 pandemic will undoubtedly change the way we live and work for the foreseeable future and new trends will emerge that will become part of our ‘Next normal’. JLL has identified and tracked several so called ‘mega trends’ impacting the real estate sector for many years now – the growth of corporate outsourcing; rising capital allocations to real estate; rapid urbanization and city building; the adoption of new technologies; and the imperative to build a more sustainable future and to take urgent action to combat climate change. Their role in shaping the sector has 24 | The coronavirus outbreak (COVID-19) Mega trends: been undeniable over the past decade but, looking to the new post-pandemic world, which trends will shape the future for occupiers and how will they influence the Enterprise of the Future post-COVID-19? Always on - Demand for solutions that AI and Robotics– An acceleration of allow operation through crises, high level of e-everything and investment in technology and readiness and resilience of Portfolio, Workforce. digitization of real estate, the workforce and the enterprise New Ways of Working – Remote working is critical to success, combined with Fast Data world – You will need homeworking, split shifts of employees in the meaningful and mass data, and the activation, office and a robust strategy on flexspace and quality and governance of fast data will be the future purpose of the office. crucial, in real time, sharp and targeted. Performance driven and orientated – Portfolio Performance and Human Performance will be central to the success, combined with the right Metrics that Matter, not only data. Adaptive Enterprise and CRE future Resilience model – Preparedness is essential and your ability to flex in a world of flux, volatile, uncertain, complex and ambiguous (a VUCA world). Responsibility – Integrating the notion of “Responsibility” is an imperative, not an option in the ‘Next Normal’: being a Responsible Employer and Employee, delivering Responsible Real Estate, writing and operating Responsible Policy and Governance state - your operational model must evolve and move away from solely being agile to facilitate an adaptive enterprise and adaptive CRE to recalibrate portfolios. The coronavirus outbreak (COVID-19) | 25 It is not about getting back to office as soon as possible. Rather the opposite approach. You should consider which functions HAVE to come back when the ( )entry option is available? Your scenario planning should lead to an ‘adaptive triggering’ to cope with the disruption as different geographies/locations close and open. It should be your focus, so that you minimize the number of people impacted and ensure your business continuity. re Reshape delivery model Steady rationlization of real estate strategies Extent of business model disrution re Narrow deployment with moderate impact on RE strategies Future A: The Surgeon Massive and accelerated rationalization of RE strategies Future B: The Sculptor Future C: The Visionary Reshape business model Old Normal circa Jan 2020 Less Depth and length of industry demand disruption More Source: Adapted from Getting ahead of the next stage of the coroanvirus crisis - Mckinsey and company © 2020 Jones Lang LaSalle IP, Inc. All rights reserved. Preparing for ( )entry into the ‘Next normal’ is an overwhelming task – and there are numerous decisions that you need to make along the way. There is opportunity in adversity in every business. Professor Joe Allen of Harvard University thinks “we’ll soon be in a place where ‘acceptable’ is no longer acceptable. The goal will be ‘optimal’.” Returning to work means reaching an optimal solution where the trust of people in their employer, their colleagues and their government/ state is beyond expectations. The physical transformation of our environments is instrumental in reaching this state and crucial to getting back to work. New habits and behaviors will need to be adopted and educated. Foremost, it is about being ALWAYS ON, being RESPONSIBLE and ADAPTIVE. We propose the following framework to ( )imagine the Enterprise of the Future post-COVID-19: re 26  | The coronavirus outbreak (COVID-19) Always on / Resilience Adaptive and Responsible Real Estate Adaptive and Responsible Enterprise Digital Elastic Ecosystems Workflow Digital intergrated agile adaptive asynchronous Culture Workflow Engagement Fulfillment & Delight well-being,Health and protection performance Liquid Portfolio strategies Workflow Digital All + Augmented Congnitive+ Digital + Mobile Robotic + Virtual Digital Workflow Experience Agile + Collaborative immassive + flexible distributed adaptive Building Intelligent Sustainable Ellicient Smart safety Values Portfolio Flexiable Always-on data-driven optimized resilent Health Vision and Guiding Principles Responsible The ‘Next normal’ will take time to evolve. Some new trends are already starting to take shape as governments, businesses and communities in some parts of the world begin to adjust to the post-pandemic environment. Several scenarios are emerging for occupiers and will be influenced by the depth and length of industry demand disruption and the extent of the business model disruption: When in doubt, put people first: More Adaptive Future Scenarios: © 2020 Jones Lang LaSalle IP, Inc. All rights reserved. The “re-set” will lay the groundwork for reimagining the new workplace as a distributed ecosystem model. The coronavirus outbreak (COVID-19) | 27 Sources of information Please visit the JLL COVID-19 website: www.jll.com/covid-19 The following list of sources could help you to better understand the coronavirus outbreak and find guidance on how to address it. • World Health Organization (WHO - https://www.who.int) • Center for Disease Control (CDC - https://www.cdc.gov/) • OSHA’s Guidance on Preparing Workplaces for an Influenza Pandemic https://www.osha.gov/Publications/ influenza_pandemic.html • IFMA Coronavirus Preparedness Research Center (www.ifma.org) • CoreNet - https://www.corenetglobal.org/stayinformed/newsdetail.aspx?Itemnumber=42852 • WEF Action Platform: https://www.weforum.org/covid-action-platform • APHA COVID-19 Conversations: https://covid19conversations.org/ • Harvard Daily update on COVID-19: https://www.hsph.harvard.edu/news/hsph-in-the-news/the-latest-onthe-coronavirus/ • COVID-19 – A Program at the Harvard T.H. Chan School of Public Health: https://covid-19.forhealth.org/ • OECD outlook on the global economy: http://www.oecd.org/coronavirus/en/ • The Hammer and the Dance: What the Next 18 Months Can Look Like, itf Leaders Buy Us Time: https://medium. com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be-b56 • Asian lessons - reopening success seems highly tied to: travel restrictions, testing, screening, contact tracing, highly targeted isolation of cases, and to some extent the use of masks. : https://medium.com/@tomaspueyo/ coronavirus-learning-how-to-dance-b-e • Iceland case study - Iceland acted early, has leaned more heavily on genetic screening along with testing and is unique as it is small and has only one major port of entry: https://www.bloomberg.com/news/ articles/-/iceland-is-the-perfect-country-for-studying-covid-19 • Sweden - Sweden seems to have taking a more controversial approach relying on voluntary social distancing measures and hoping for a quicker path to herd immunity, but has seen a higher death rate. https://www. nature.com/articles/d--x 28 | The coronavirus outbreak (COVID-19) The coronavirus outbreak (COVID-19) | 29 Contact To find out how we can support your global real estate market strategy with research insights and strategic advice, please contact one of the members of the JLL Corporate Solutions team. Dr. Marie Puybaraud Global Head of Research JLL Corporate Solutions- 30 | The coronavirus outbreak (COVID-19) David Barnett Research Manager, Americas- Tom Carroll Head of Research EMEA JLL Corporate Solutions- Peter Guevarra Research Director, APAC- Scott Homa Senior Research Director, Americas-The coronavirus outbreak (COVID-19) | 31 References: • https://www.oecd.org/washington/newsarchive/covid-19jointactionstowinthewar.htm • https://cleantechnica.com/2020/03/18/imperial-college-epidemiologists-report-projects-up-to-2-2-million-covid-19-deaths-in-us-510000-in-uk/ • https://bcghendersoninstitute.com/how-will-things-be-different-when-its-all-over-513900bfb0af • https://www.wsj.com/articles/a-workplace-attuned-to-the-humanity-of-workers-?mod=ig_afterthepandemic • https://www.bisnow.com/houston/news/architecture-design/the-coronavirus-is-going-to-change-how-we-think-about-design-103669?utm_ source=CopyShare&utm_medium=Browser JLL About JLL About JLL Research www.jll.com/covid-19 JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion, operations in over 80 countries and a global workforce of more than 93,000 as of December 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com. JLL’s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 500 global research professionals track and analyse economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fuelled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions Jones Lang LaSalle © 2020 All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof. 32 | The coronavirus outbreak (COVID-19)