The future is today

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shared AMBITION

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers, and investors achieve their business ambitions. JLL has nearly 300 corporate offices, operations in over 80 countries, and a global workforce of more than 77,000.

jll.com.tr

Rapid Real Estate TransformationReal estate is a strategic device that should be used wisely. We have already seen how new business models that cater for people’s needs and preferences like never before have disrupted retail and hospitality. It was only a matter of time until office space had its own catalyst for change.

We are in a period of rapid transformation that has the potential to completely redefine the office market. Companies now have a desire for more flexibility by putting the focus firmly on the human experience and the most efficient utilization of the workplace. All these brings with it profound implications for occupiers and investors.

The physical workspace is being re-evaluated, and flex or hybrid space did not actually appear out of nowhere!

In addition to progress in the concepts of serviced office and co-working over the last decades, flex office’s rapid growth is being driven by advancing technology that has directly impact on the evolving nature of work, social and generational upheaval as well as the shifting structure of the economy.

Today, we’re seeing the rise of the gig economy and an explosion of start-ups. Corporate attitudes are also changing with an increased emphasis on flexibility and agility. These triggers are challenging many aspects of the established office leasing model – and encouraging more companies to experiment with flexible space.

The future of real estate is more human than you think.

People are a company’s most valuable asset on back of 3-30-300 rule, which illustrates the average order of magnitude between a company’s costs for utilities, rent and payroll.

€3 for utilities, €30 for rent and €300 for payroll

*saving or gain per sqm

A 10% INCREASE IN ENERGY EFFICIENCY

A 10% DECREASE IN RENT A 10% GAIN IN PRODUCTIVITY

€0.30 €30€3

Winds of Change

Gen-Z’ers and Milllenials, who are expected to be game-changers, are waiting on the door for redefining the role of work in life. Thus, enterprises have to prepare for the workplace of the future. Indeed, over the last two decades, the global business ecosystem has been a significant metamorphosis on back of globalization, advancing technology and change of the workforce, with particularly the emerge of Gen-Y’ers. Nevertheless, companies have no choice but to be entirely ready for not only new business models but also the ever-changing nature of work.

We are seeing a strong demand toward greater levels of work-life balance among workforce. Given digitalisation of communication, working remotely and at flexible schedule stand at the top of the list of changing workforce expectations.

Besides, employees would prefer to work at an organization, in which achieved the elimination of bureaucracies within organizational processes as well as an open and culturally-sensitive organizational culture.

JLL’s global survey, covering 7,364 respondents in 12 countries, demonstrates that employee expectation is centered upon happiness, and workplace has a great role of talent attraction and employee effectiveness

KOLEKTIF HOUSE | LEVENT

Ideal company for the next jobLarge corporations are still attractive, but employees pant for an entrepreneurial culture. Either in a large corporation or outside, 46% of employees today aspire to work in a start-up environment.

If you were moving to a new company tomorrow, what kind of structure would you like to work in?

Large Corporation

Total Entrepreneurship

Small & Medium Enterprises

= 40% + 21%

= 9% + 9% + 7%

14%

Be an employee ina large corporation

Be an employee in a large corporation but work in a start-up environment

Be an intrapreneur* Become self-employed or an independent

worker

Work at a start-up

* Working in a company that allows people to work on a personal professional project on its premises while benefitting from its support

61%

25%

?

A work environment should facilitate...

Personal learning and development

54%Creativity

53%Inspiration

43%Personalization

34%Groups and community

31%Technological

Innovation

25%Switching off and

meditation

25%Digital

Experience

24%Emotion

22%Boldness

21%

Happiness at work

69%Recognition

60%

KOLEKTIF HOUSE | LEVENT

Top Five Innovative WorkplacesCommunity Spaces

56%For example Coffee/tea areas, lounges, terraces etc.

Spaces Dedicated to Collaborative Working

50%For example -internal- informally arranged co-working spaces, war rooms or project rooms dedicated to a particular project for a certain period of time.

Service Desks

33%For example concierge, IT desk, dry cleaning service etc.

Creative Spaces

32%For example brainstorming or design-thinking rooms, fab labs (open and participative manufacturing workshops) etc.

Incubator or accelerator

28%For example dedicated space enabling colleagues and external talent to develop personal projects while making use of the company infrastructure, support and advice.

Neither Serviced Office nor Co-working

Along with co-working more recently, serviced offices have created new workspace concepts, particularly in workplace design, over the past 20 years. However, a ground-breaking hybrid concept, which not only applies to freelancers, start-up and SMEs but also progressively to bigger companies, has resulted in the remarkable development of the broader flexible space market in recent years.

The office market may undergo a disruption with the emerge of larger organizations in flexible office market. Flexible workspaces enable companies to leverage their real estate as an agile rather than a fixed asset. As for flex space operators, enterprise companies offer more robust revenue streams and a much larger and stable marketplace, particularly if they can secure relationships at regional or global scale. The terms serviced offices and co-working are often used indiscriminately. Nevertheless, the various business models, including both rooted and well-known operators and newly-emerged innovative providers, all have distinct features.Serviced offices globally started in the 1980s with a host of local and international providers offering traditional office set-ups under a flexible lease. Co-working brands have been around for almost as long, although they really came to the fore after the Global Financial Crisis. Unlike more traditional serviced offices, co-working was initially pioneered by a new wave of start-ups and entrepreneurs looking for a fresh approach to the workplace. It offered a genuinely new approach: its design, amenities and culture would enhance collaboration, openness, knowledge sharing, innovation and the user experience.

Traditional Serviced Office 80% lettable office spaceSingle membership model

Co-working 80% co-working space

Multiple membership model

Hybrid 60% lettable office space

Multiple membership model

Alternative to traditional office solutions, affording companies the possibility of implementing versatile solutions

Used by individuals, SMEs and increasingly by larger companies

Lettable offices and co-working spaces integrated with amenities that focus on physical and mental wellness

Offerings

Increased flexibility Leveraging real estate as an agile, by enabling enterprises to adapt to business fluctuations, rather than a fixed asset

Access to innovationMore engaged and motivated talent with advancing creativity and out of box thinking

Reductions in real estate costsAvoidance of high initial cost for renovating and setting up the office

Limited to coworking space

Commitment to either long-term leasing or to facility management

Only for start-ups or corporates

Subleasing

Few desks at cafes, restaurants and hotels Incubator/accelerator

What flex space is

What flex space is not

KOLEKTIF HOUSE | LEVENT

StakeholdershipThe satisfaction and productivity of the people who are using the workspace day in and day out are the new markers of business success for both occupiers, investors and operators.

Occupier PerspectiveAs the war for talent intensifies, corporates are more concerned with the attraction and retention of their employees than ever. Organizations now expect their real estate to support this effort, and landlords who actively help them to achieve this will have a competitive edge.

Besides; time and money stand at the forefront as key components in today’s ever-changing and competitive global marketplace. Thus, companies focus on agility in every part of their ecosystems, and within this regard, they pay regard to flexible and cost-effective options to their conventional workplaces.

Flexibility by short-term lease optionsEasy options for expansion or contraction according to the scope of the workflow

No capital expenditureReady facilities with fitted out with furniture and equipment as well as fully deployed reception areas, meeting rooms and networking areas

Efficient space utilizationOnly pay for meeting rooms and pantries in case of necessity

Built-in office support servicesNo need to focus and spend on cleaning, maintenance, security, professional staff

According to JLL’s survey based on 7,350 global office occupiers, companies can create and enhance engagement, empowerment and fulfilment among staff through the best use of real estate.

Engagement must come first• Introducing innovative workspaces will drive engagement• Use workspace to foster an entrepreneurial spirit to attract and retain employees• Consider adjusting workplace density to improve employee effectiveness• Formalize human experience in the organization structure

Empowerment will drive change• Trust, kindness and taking initiatives – the top three work philosophies – will empower employees• Agility – choice to work elsewhere will improve performance and quality of life• Employees appreciate space for concentration, regeneration and movement

Fulfillment is the new happiness• Happiness is the number one priority for a positive workplace experience• Companies must consider spaces dedicated to health and well-being• Managerial approaches linked to recognition and personal learning and development also impact employee fulfillment

First and foremost, hybrid offices enable companies to focus their core businesses without distracting by administrative affairs and IT processes.

Particularly in the moving process that tenants mostly refrain from initial costs and long-term contract, occupiers take satisfactory opportunities with flexible contract conditions and aesthetical workplace at no cost. What’s more, upsizing and downsizing always stand at the table with a favourable conditions on back of multiple subscription options.

Besides, the <500 sq m segment will become harder to let via traditional leases. Provide modular, quick turnaround space that’s easy to let for 1-24 months.

Mahir Mermer Senior Director, JLL Turkey

Several major corporate occupiers have already committed to providing more flexible space solutions to their employees.

In New York, Microsoft has opted to house 300 employees (70% of its global marketing and sales team) at two external co-working sites. Elsewhere, Amazon uses co-working space as swing space; Merck uses it for innovation; Red Bull uses it for business development; while Facebook uses it for its contractors.

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Stakeholdership

Never before have investors had to more closely study how companies and their employees behave in the workplace. As companies take more responsibility for and exert greater influence over the satisfaction of their people, investors must future-proof their buildings by tuning into this need.

By focusing on the end user, investors and developers have been able to create multi-purpose leisure facilities; destinations people want to spend time and money in.

Yet flexibility and an investor’s search for stable income appear to be opposing forces; occupiers today move fast, while long-term leases don’t. Alongside the impact of accelerating business cycles, companies will question their long-term commitments, and so those landlords who offer a wider range of space solutions will have the upper hand. What’s more, the significant vacancy rate even in the CBD of Istanbul has been prompting landlords to seek innovative solutions.

Tevfik Eraslan Chief Executive Officer, İş Asset Management

Investor Perspective

The needs of offices are undergoing a radical change according as the business life has been evolving. Given that flex office brands provide the most rapid adaptation to such alteration, I believe these brands will be favoured more in the upcoming years. As the corporate investor of Grade A office buildings, we will be increasing our cooperation with flex office brands that promise a more efficient, flexible, technological and social work environment - in other words, much more than the leasable area.

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Demand for flexible, innovative workspace offers investors with the chance to generate additional income:

• Typically, 10%-20% of a flexible space operator’s revenue is generated by meeting spaces, event venues and class space. Installing ‘open to all tenants’ innovative spaces adds to the service level of a building and can act as an additional source of income • A mixed offering can feed into the blurring line between work-live-play. Offices by day, yoga studios by night, or art galleries at weekends

• Dynamic pricing models could also provide investors upside return as working hours change and demand fluctuates between peak and off-peak office hours

Investor Perspective

Sustainability, which was ‘nice to have’ for conscientious investors whilom, has been becoming a ‘must have’ in many markets. It is granted that return on investment from driving employee satisfaction isn’t immediately tangible today. However, in the near future, companies’ return on investment is envisaged to depend on new measures of success - the satisfaction, productivity and wellbeing of people in an office building. Besides, these new criteria will significantly impact the design, build and management of an asset.

Over time, flexible buildings will provide an opportunity to boost net operating income via focusing on space that enables a positive human experience, and being able to present companies with measurable impact. By shifting to a more service-oriented and flexible lease model, tenants are likely to become stickier, with ancillary services providing additional income and voids shortened.

Stakeholdership

The world is growing and changing faster than ever. The main drivers are continuing globalisation, faster and deeper technological developments, increasing mobility, and the needs of new generations coming into the workplace. This is why companies have to be more agile and grow both internally by strengthening their culture, and externally by developing existing/new products to adapt to the changing market trends. The flex space solutions arrived to facilitate and enable this change, and help companies be more suited to the future. It is crucial for individuals and companies to be more and more lean by servicing all their needs, and focusing only on their strengths.

Ahmet Onur Co-founder & CEO, Kolektif House

Aside from location quality that dominates the building performance, flexibility, space and facility stand at the forefront as increasingly critical stimulants. It’s one of the reasons why some flexible office space operators are doing well: they marry sleek interior design, innovative work practices, top-class community amenities and flexible opening hours.

Stakeholdership

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Flex: A Global Phenomenon

Average Annual Growth of Global Flex Space Sector

30%2015 - present

Total Flex Space Market 2014

Total Flex Space Market 2019

KOLEKTIF HOUSE | MASLAK

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2010

20

11

2012

20

13

2014

20

15

2016

20

17

2018

2019

**

2020

**

Tota

l Fle

x St

ock

(sq

m)

New

Ope

ning

s (sq

m)

New Openings (sq m, LHS) Total Flex Space Stock (sq m, RHS)

Flex: A Global Phenomenon Accelerated Growth in Europe

since 2014

* JLL 24 Office Index Markets** Confirmed Pipeline 2019 & 2020Q2 2019 data

Istanbul: Huge Room for Improvement

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

New York

City

Chicag

o

Los Ang

eles

Boston

San Fran

cisco

Londo

n Pari

s

Amsterda

m

Madrid

Berlin

Stockh

olm

Warsaw

Dublin

Istan

bul

Shang

hai

Banga

lore

Beijing

Tokyo

Gro

wth

Stoc

k (s

q m

)

Current Flex Stock (sq m) 2018 Growth

Current Stock

115,000 sqm

by 29 brands

in 110 locations

Growth Prospect

2019

2020

25%

50%

Tenant Characteristics: Hybridization

Software 21%

Advertising 13%

Digital Agency 9%

Digital Marketing

6% Service

6%

Design 6%

Law 5%

IT 5%

Education 5%

Digital Consultancy

5%

Film & Video Production

5%

Corporate Consultancy

4%

PR 4%

Brand Consultancy

4%

Other 2%

*Per account

Source: Kolektif House

Contacts

JLL TURKEYMaslak Link Plaza, Ayazağa Mah. Eski Büyükdere Cad. No:3/5 34398 Maslak – Istanbul, TurkeyPhone: (+90 212) 350 08 00Fax: (+90 212) 350 08 06www.jll.com.tr

KOLEKTIF HOUSE | LEVENT Esentepe Mah. Talatpaşa Cad. No: 5 (Harman Sok. Girişi) Şişli / İstanbul

KOLEKTIF HOUSE | MASLAK42 Maslak, Maslak Mah., Ahi Evran Cad. No: 6, D: 3 Sarıyer / İstanbul

KOLEKTIF HOUSE | ŞİŞHANE Nejat Eczacıbaşı Binası, Sadi Konuralp Cad. Kat:2 Şişhane / İstanbul

KOLEKTIF HOUSE | ATAŞEHİR Nida Kule Ataşehir, Barbaros Mahallesi, Begonya Sk. No: 1, Ataşehir / İstanbul

(+90 212) 924 24 10www.kolektifhouse.co hi@kolektifhouse.co

KOLEKTIF HOUSE | MASLAK