by Brianna Crandall — March 28, 2014—The mature, yet highly fragmented Australian facilities management (FM) market for retail, wholesale and warehousing is likely to find new opportunities in the trend toward more sustainable facilities and redevelopments or extensions, according to recent analysis from global growth consulting firm Frost & Sullivan.
Frost & Sullivan’s Strategic Analysis of the Australian Facilities Management Market for Retail, Wholesale, and Warehousing: Consumer Demand and Global Investor Activity Secure FM Opportunities found that while new construction activity remains subdued, the opportunity to offer bundled or integrated services represents a significant untapped market. According to the report, market revenues are expected to grow at a compound annual growth rate (CAGR) of 0.8% over the period 2012 to 2019.
In 2012, 35% of FM services were outsourced and the remaining 65%, delivered in-house. Of the outsourced services, only 9% was estimated to have been delivered as an integrated facilities management (IFM) solution, while 91% was delivered as “other services” (70% provided as single FM services and 30% as bundled FM services).
The FM market, like many others, has benefitted greatly from Australia’s stable economic climate. While several economies in Europe and North America declined during the global downturn, Australia became even more prominent. Its retail market’s forecast growth rate of 2.9% in 2012-2013, although modest, is still higher than Europe’s or North America’s.
“FM providers will be able to extract greater benefit if they are successful in altering the perception among large shopping center owners that the operations and maintenance of the shopping center is ‘core business,'” said Frost & Sullivan industry director Ivan Fernandez.
As the state of the shopping center directly translates into higher rents and profits for building owners, they look to manage FM services in-house and outsource only single FM services (cleaning, security services, repairs), note the researchers.
Retaining FM in-house is also a cost-cutting measure, with some shopping mall owners reducing cleaning hours by as much as 20%, according to the report. Added to this, the growing popularity of online shopping is reducing floor space and the requirement for certain FM services; but on the other hand, it also increases the need for services such as storage, logistics and delivery services.
“Another new trend that is influencing the FM market is the mushrooming of green buildings,” noted Fernandez. “The sustainable management of these buildings will present FM providers with opportunities to strategize and innovate their offerings.”
Market participants will look to optimize energy use and make efficient use of materials, transport, cleaning, water use, insulation, or heating, ventilation and air-conditioning (HVAC). These market trends are expected to drive demand for FM services for larger facilities through integrated service offers.
The new report is part of the F&S Building Management Technologies Growth Partnership Service program. Frost & Sullivan’s related research services include: Total Facilities Management Market in Australia, Strategic Analysis of the Facilities Management Market in the Healthcare Sector in Australia, and Non-Residential LED Market in Asia-Pacific. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants, notes the firm.
