Market Trends of Integrated Facility Management Industry
Commercial Segment to be the Largest End-user Segment
- Commercial entities cover office buildings constructed or occupied by business services, such as corporate IT and communication offices, manufacturers, and other service providers. Due to the provision of necessary fitments, interiors, and commercial buildings, decoration and management have gained significant importance, driving the commercial sector market. Commercial spaces require property accounting, renting, contract management, procurement management, and several other services, so hiring professionals becomes necessary. Due to such factors, the commercial category has further growth opportunities in the market, and the trend is likely to continue throughout the forecast period.
- Various retail businesses are expanding their presence by opening new stores in the United States, creating demand for soft FM services. For instance, in April 2023, IKEA store owner Ingka Group announced a plan to spend EUR 2 billion (USD 2.2 billion) expanding in the United States over the next three years. With this plan, the company finalized the opening of eight new big IKEA stores and nine smaller stores and upgraded existing stores in the United States, which is IKEA's second-biggest market by sales after Germany.
- Furthermore, the retail sector in countries like India has shown significant growth during 2023, with the highest record of 7.1 million square feet across key cities in the country, which is 47% more than in 2022, according to CBRE. Recently completed mall constructions primarily led to the demand for retail spaces. Fashion and apparel accounted for the largest leasing of commercial spaces with the expansion of domestic and international brands. Retail space growth in malls is witnessing higher consumer traffic, necessitating robust maintenance, cleaning, security, and energy management services.
- According to a survey by Colliers International, among real estate investors, offices and industrial and logistic properties are expected to be the most demanding asset classes in 2023, with nearly 60% of global investors intending to invest in these types of properties. Multifamily real estate came second with 48% of respondents, followed by hotels.
- Overall, rebounding commercial activities are expected to drive the need for integrated facility management to manage increased occupancy and adopt evolving technologies that allow businesses to address core activities while ensuring smooth business operations.
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Asia Pacific to Hold Major Market Share
- The Asia-Pacific region is witnessing an increased development of commercial facilities, with significant investments in infrastructure projects such as hospitals, airports, manufacturing facilities, data centers, and educational institutions, which are expected to drive the Integrated FM market growth. Increasing awareness of Integrated FM outsourcing and service integration benefits is expected to fuel the market's development.
- In China, many facilities managers are incorporating sustainable building management techniques to encourage workplace efficiency and improve the infrastructure to increase asset longevity. Integrated Facility Management impacts every aspect of the organization; a facilities manager's position and the plans for strategic business management will become increasingly strategic in the country.
- China's economy offers an enormous market potential, especially in commercial hubs such as Shanghai and Beijing. Increasing government investments in the country's real estate sector would provide growth opportunities to the market. For instance, China's Five-Year Plan (2021- 2025) targets key areas to balance the country's economy.
- In December 2023, China's automotive company, BYD, announced it would invest USD 412 million to supply South Korea's automaker KG Mobility Co. Ltd with a stable supply of EV batteries. The factory is expected to start mass production in 2025. The country is home to big automotive market players, including LG Energy Solutions, Samsung SDI, SK On, and BYD. Their investment in the factory is crucial to advancing the EV ecosystem in the country.
- By type, hard FM such as MEP (Mechanical, Electrical, Plumbing) and HVAC (Maintenance Services, Enterprise Asset Management, and others) is gaining rapid popularity in Asia-Pacific. Growing demands for creating and operating a planned maintenance schedule across all areas of facility management and enhancing the energy efficiency of buildings by ensuring a reduction in heat loss from premises and lengthening a premise's operational lifespans are propelling the growth of the Hard FM segment in the market.
- In Japan, FM businesses must deal with frontline labor shortages and the upkeep of aging facilities, including buildings and equipment like air-conditioning and lighting systems. Improvements in living standards in the country have escalated demand for buildings equipped with sophisticated security features that can be managed more efficiently. This trend has been particularly evident in urban centers and is expected to gain even more momentum in the forecast period.
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