Frost & Sullivan: Next-gen solutions will transform FM market within 5 years

by Brianna Crandall — August 26, 2016 — The next five years will be defining ones for the facilities management (FM) market, according to new analysis from global growth partnership company Frost & Sullivan. As services mature and commoditize, innovation through new business models, technology deployment, and more sophisticated value propositions will be critical for growth.

According to the report, enabling technologies such as Internet of Things (IoT), Big Data and advanced connectivity will drive efficiency for both service suppliers and clients, while changes to both the future workplace and workforce create robust opportunities for integrated workplace change management solutions.

Partnerships, collaboration and mergers and acquisitions (M&As) are expected to increase to facilitate service integration, convergence with energy management, delivery of business productivity, smart technology, and internationalization of contracts. Successful suppliers will position themselves as client advisors on business productivity in order to provide a value proposition beyond mere cost management.

The new analysis finds that the market will touch $945.11 billion by 2025, with integrated FM (IFM) as the fastest growing segment. The study examines eight trends transforming the FM market, and envisions the industry in ten years’ time. The research offers growth projections, a vision of future competition, technology impact, and emerging business models, and details the key mega trends shaping the market.

Frost & Sullivan Energy and Environment Partner John Raspin explained:

Increasing price competition that erodes market share and profits compel[s] FM service providers to focus on the retention and growth of existing customers by leveraging technology. Anything as a Service or XaaS business models will allow first-movers to own and re-define customer relationships.

Region-wise, the fastest growing FM markets are expected to be Asia-Pacific (APAC) and the Middle East even as North America and Europe continue to lead in terms of innovation. Further:

  • Europe will exhibit the highest rate of M&A activity.
  • North America will see service integration enhance efficiency and margins as single-service markets stagnate.
  • The dynamic FM market in APAC will be driven by economic growth, commercial construction, and a rising culture of service outsourcing.
  • Markets such as the UK and the Nordics will be forerunners in workplace optimization and business productivity as local participants innovate to overcome commoditization of FM.
  • High growth in the Middle East will be fueled by construction activities and strong presence of multinational firms.

Raspin added:

Demanding and complex regulations will encourage top companies to outsource compliance to capable FM providers and sustainability service firms. This will enable the FM market to also be a driver for sustainability management.

Overall, the global outsourced FM market will become a complex marketplace worth almost $1 trillion by 2025, with bundled and integrated services accounting for a combined 35% of total revenues.

The Future of Facility Management is part of Frost & Sullivan’s Home and Buildings Growth Partnership Service program. All studies included in the firm’s subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.