The global facility management services market size was US$753.7 billion in 2020 and US$763.49 billion in 2021. It is expected to grow at a CAGR of 3 percent to $809.98 billion by 2024. The North American facility management market is showing modest growth after easing the lockdown with significant demand for complex and cleaning services. The companies (buyers) based in Russia or Ukraine who want to minimize the risk of FM/RE service providers going out of business need to map the Tier 2 and local companies to avoid service disruption.
The impact on commercial real estate and facility management is likely to be indirect as the impact of the conflict feeds through to commodity prices, inflation, bond yields, and ultimately economic growth. However, the main impact will likely be higher energy prices, adding to the inflationary forces already being felt in most European economies.
Labor costs (wages and benefits) account for about 50 percent of total costs. Suppliers have to pay high salaries due to labor shortages and increased demand. An increase in remote work is likely to minimize office utilization, while landlords exposed to short-term leases will be most vulnerable.
Post-COVID-19 demand for flexible contracts and co-working spaces is expected to increase. In the first quarter of 2022, demand for facility management services such as HVAC, cleaning, catering, physical security services, etc. increased by 4 percent worldwide and the momentum is expected to continue.
Suppliers as well as prominent buyers are exploring various implementations of AI to provide sustainable facility management solutions as the industry struggles with high costs, high spending and heavy maintenance
Several suppliers are working with device manufacturers to develop AI-based solutions coupled with IoT-based sensors to automate and improve the efficiency of various processes such as cooling, lighting, etc.
IoT-enabled building automation systems can integrate disparate systems—such as HVAC, lighting, security, access control, and video surveillance—into one set of rules, making management easier.
IoT-based systems coupled with data analytics tools can provide predictive maintenance analytics to better identify the various systems needed for maintenance and help manage repair costs and replace the building’s critical systems.
The continued emphasis on LEED certification aims to make buildings greener, more efficient and more sustainable. Constant product innovations have lowered the prices of the technology and gained widespread adoption to ensure lower energy consumption. In addition, the interoperability of different systems and devices has confirmed that multiple systems can be assembled to work seamlessly and be aligned to achieve specific goals.
Increasing adoption of robots in various services such as cleaning due to multiple benefits such as lower labor costs, the ability to perform tasks outside of working hours, increased efficiency through automation, and reduced safety risks. Some vendors are also experimenting with using robots for security patrols and greeting visitors. In addition, drones are increasingly being used for surveillance, particularly in the case of sprawling properties and high-rise buildings.
Large buyers want to combine project management, integrated facility management and real estate management under one provider.
The decisive factor here is the desire to gain better insight into the company’s entire real estate portfolio and to enable a consistent quality of service across all locations.
Large companies are increasingly using managed workspaces to accommodate their growing workforce and invest in transition periods. This has led to an increased demand for facility management service providers that support the adoption of flexible workspace arrangements and the ability to support employee flexibility to create more comfortable, energy-efficient workspaces that support a positive employee experience.
Vendors are looking for intelligent technology that integrates with the control and optimization of building functions ranging from fire safety, security, and asset tracking systems to lighting management, HVAC maintenance, and smart parking through IoT sensors for building automation systems.
Buyers are extending the average contract length for FM services such as hard services and maintenance. This is driven by the understanding that with longer relationships comes more trust and the ability to test new strategies with greater confidence.
The advent of the vested outsourcing model is fueling this trend again as buyers look to take preferred supplier commitments to a higher level.
Centralized command centers increase efficiency because they can monitor many buildings, employees can perform in-depth analysis and use powerful software to run algorithms across large amounts of data, as well as save 10 to 15 percent on energy costs and improve building sustainability.
Sensor technology is IoT in action. It allows a building’s assets to communicate their operational and health status without human intervention. Advances in sensor and battery technology have introduced wireless devices with little or no configuration and maintenance that can be deployed in minutes.
To mitigate the risks associated with service quality, buyers are shifting to collaborative relationships with their facility management service providers. Buyers are offloading complex spend categories and aiming for cost savings of up to 20 percent.