GLOBAL TRENDS: LOCAL OPPORTUNITIES

GLOBAL TRENDS: LOCAL OPPORTUNITIES 2018 Trends Panel

September 13, 2018

ERIC GOLDSTEIN Executive Director King of Prussia District

TODAY’S PANELISTS

DAN HERSHBERG

LAUREN GILCHRIST

CEO & Co-Founder Workhorse Brewing Company

Sr. Vice President & Sr. Director of Research JLL

PETER M. GROLLMAN

LEA ANNE WELSH

Sr. Vice President, External Affairs Children’s Hospital of Philadelphia

COO Korman Communities President AVE

THANK YOU SPONSORS Annual Gold

APPI

energy

Annual Silver

Networking Sponsor In-Kind

Moderator

NATALIE KOSTELNI Reporter Philadelphia Business Journal

DAN HERSHBERG CEO & Co-Founder Workhorse Brewing Company

LAUREN GILCHRIST Sr. Vice President & Sr. Director of Research JLL

Global trends: Thebigthemes impactingoffice Lauren Gilchrist Senior Vice President J LL Prepared for:

September 13, 2018

Streamlining and simplifying office leases

Conventional landlord $8,000 per desk

7,500-s.f. lease for $35.87 per s.f., with 2.5% annual escalations, and 2 months free, and $75 of their TI build-out cost covered, but the total cost and schedule of build-out are still unknown, plus they may have options to expand, but they come at an unknown cost, and they have to cover some of the utilities, and they must pay their own portion of the property taxes, which are dependent on the next city budget, and‌

2

Defning flexible space models

1

2

Coworking and serviced offices

Meeting, conferencing and training

Coworking and serviced offices

Meeting, conferencing and training includes

Flexible-term workspace includes

• Executive suites (e.g.

Regus)

• Office meeting venues (e.g. Convene)

• Modular spec suites

• Coworking (e.g. WeWork, Industrious)

• Business clubs (e.g. Yale Club)

• Month-to-month leases

• Virtual office (e.g.

Servcorp VO)

• Hotels

• Incubators/accelerators

• Subleases • Expansion/termination options

• Event spaces (e.g. museums, galleries) • Internal conference rooms

3 Flexible-term workspace

Tenant demand is increasingly shifting here

3

J LL forecasts a flexible space revolution

Present

Past

80% occupancy

20%

Future <5%*

30%

Flexible

Flexible

Tenant 80% demand is traditional increasingly shifting occupancy here 15%

60% traditional occupancy

10% vacant

vacant

vacant

40%

50%

Utilization

Utilization

80% Utilization

300+ s.f.

200+ s.f.

<150 s.f.

per person

per person

per person

*Approximately 2% of current U.S. office inventory is controlled by independent, third-party flexible office providers (spanning all operator types, fromtraditional executive office suites to coworking to incubators). Given industry shifts, flexible workspace and shared amenity spaces are projected to encompass up to 30% of the office market by 2030.

4

Cost effective, collaborative workplace strategies have shifted businesses to open plans and beyondâ&#x20AC;&#x201D;but how much is too much?

Cellular space

Open plan

Open plan +Support

Hybrid mobility

Fully assigned offices and/ or high partition workstations

Fully assigned open plan workstations

Fully assigned open plan workstations and support space

Mix of unassigned and assigned workstations and support space

Full mobility Fully unassigned workstations and support space

350-300 s.f./person

300-250 s.f./person

250-200 s.f./person

200-150 s.f./person

150-100 s.f./person

Increasing choice, efficiency, flexibility and cultural transformation 5

Best in class workplaces Agility to expand/contract for all employees

78% reduction in storage – 35% savings on paper

Driven by internal mobility, not ‘work-at-home’

Provide for up to 10% growth in frst year with no new desks or churn cost

Target of 10-20% occupancy cost savings per year

Employee retention increased

92% don’t want to revert to desk ownership 6

BA+unemployment is down to 2.2%, far beyond full employment, creating ferce competition for talent Unemployment rate for bachelorâ&#x20AC;&#x2122;s degree holders (%)

6%

5%

4%

3%

2%

1%

0%

Source: JLL Research, Bureau of Labor Statistics

7

Urbanizing suburbs are the poster child for 21st century suburban development Themove to live/work/play is largely a result of workers wanting to reduce or eliminate bad commutes King of Prussia • Housing: More than 1,600 housing units completed in 2017-2018, with more planned • Retail: Walkable KOP Town Center delivered with 263,000 square feet of differentiated retail • Office: New office construction (Geoblue’s 110,000 s.f. building) • Multimodal: Preferred alignment identified for KOP rail connection, continuous trail system from Center City to Exton via KOP heading to completion

8

Federally designated Opportunity Zones will change the landscape of real estate investment if properly contextualized and implemented

J LL Philadelphia Research Lauren Gilchrist lauren.gilchrist@am.jll.com +1 215 399 1829

Š 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

PETER M. GROLLMAN Sr. Vice President, External Affairs Childrenâ&#x20AC;&#x2122;s Hospital of Philadelphia

GLOBAL TRENDS: LOCAL OPPORTUNITIES KING OF PRUSSIA DISTRICT September 13, 2018

CHOP OVERVIEW • Nation’s first children’s hospital • Number of Beds: 561 • Outpatient Visits: 1.3 Million • Number of Employees: 15,500+ • Number of Trainees: 425 • Annual Revenue: $2.6 billion • Total enterprise is 6.2 million square feet • 50+ locations from New York to Lancaster PA, to Cape May NJ

CHOP CARE NETWORK-CARE THAT’S CLOSE TO HOME • Includes 31 primary care sites embedded in local communities • 250 providers • ~250,000 children • ~750,000 visits/year • Largest pediatric primary care market share in Philadelphia and surrounding counties

CHOP NETWORK MAP

HEALTHCARE TRENDS • Affordable Care Act • Medicaid • Research Innovation, Telemedicine, Access • Consumerism

CHOP KING OF PRUSSIA HOSPITAL • Opening in 2021 • 52 inpatient beds • 16-bed pediatric intensive care unit (PICU) • 24/7, 20-bay pediatric emergency department • 4 operating rooms • Full-service Radiology Department

YOUR COMMUNITY – OUR COMMUNITY • King of Prussia Mall Play Area • CHOP Cares • Wawa Volunteer Center • CHOP Minds Matter Concussion Care

KING OF PRUSSIA MALL PLAY AREA • King of Prussia Mall attracts visitors well beyond the metropolitan region • More than 24 million shoppers annually • Approximately 40% have kids

LEA ANNE WELSH COO Korman Communities President AVE

THE INFLUENCE OF TECHNOLOGY · Mobile First · Want everything at the push of a button · Booking extended stay sight-unseen · Reliant on reviews (what their networks is saying) · Social Media is the new store front

ERIC GOLDSTEIN Executive Director King of Prussia District

TODAY’S PANELISTS

DAN HERSHBERG

LAUREN GILCHRIST

CEO & Co-Founder Workhorse Brewing Company

Sr. Vice President & Sr. Director of Research JLL

PETER M. GROLLMAN

LEA ANNE WELSH

Sr. Vice President, External Affairs Children’s Hospital of Philadelphia

COO Korman Communities President AVE

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KOP BEERFEST ROYALE October 4 & 6 $10 off Saturday Sessions GLOBAL10 $15 off Donnerstag GLOBAL15

GLOBAL TRENDS: LOCAL OPPORTUNITIES 2018 Trends Panel

September 13, 2018