By Shahar Alster
Chief Executive Officer & Co-Founder
SpaceIQ

The facility management market could be worth as much as $59.33 billion by 2023, according to a report by B2B research firm MarketsandMarkets™. Already estimated at $32.21 billion in 2017, the industry is poised for impressive growth in just a few years.

The report pegs the industry’s Compound Annual Growth Rate (CAGR) at 11.4 percent—an impressive leader within the broader segment of Office Administrative Services, which is expected to see 1.7 percent total employment growth over the next decade, according to the U.S. Bureau of Labor and Statistics. Facility management is ranked among the industries with the fastest-growing demand and wage scales, alongside various healthcare services, software publishing, and positions within education.

The facilities management market size shows a direct demand for smarter workplaces—both in deployed technologies and management strategies.

What’s driving the market?

The surging facilities management industry comes on the heels of several key drivers. Namely, technology and shifting work habits in an environment where commercial real estate (CRE) costs consistently increase. Let’s take a look at what’s specifically behind the rise of modern facilities management.

The Internet of Things (IoT)

The IoT is perhaps the biggest driver of modern facilities management. It quantifies previously unknown variables and provides a constant, real-time stream of data. Insights gleaned from the IoT power better decision-making and emphasize optimization, instead of just accommodation. This newfound mode of improvement has prompted companies to rethink their workplaces and their role in supporting the business.

Rising CRE costs

Rising CRE costs are cutting into balance sheets for businesses big and small. To minimize the damage, companies are using better facilities management to maximize value and introduce economies of scale. Emphasis on lease management and CRE optimization call for qualified insights, which are delivered by a dedicated facilities manager.

Globalized economic growth

On a macro scale, the expansion of companies across borders and overseas has resulted in greater focus on asset management. Each business location becomes its own cost center, which demand proper oversight. Managing a portfolio of properties is crucial—especially when considering local building codes, safety standards, and permitting regulations.

Shifting office environments

The downfall of the traditional office layout has put major emphasis on space planning and workplace logistics. Managing open offices, activity-based workspaces, hot desks, hotel desks, and the broad conglomeration of spaces present in a modern workplace takes dedicated oversight. Moreover, workplace managers who are able to predict and oversee these diverse spaces help the company maximize the value of its lease through space utilization and optimization.

Other factors—Space-as-a-Service, the gig economy, and sustainable business practices—also fall within the realm of facilities management. So much of business success relates to the workplace. This realization has prompted companies to focus extensively on how they’re using and managing facilities.

Headwinds and hurdles

Despite the rapidly growing demand for better facilities management, pitfalls still exist. Facility management market analysis shows several headwinds within the industry.

Lack of managerial awareness

The benefits of facilities management aren’t entirely recognized by the C-suite. The problem stems from a lag in understanding and adopting prerequisite technologies. Many businesses are still making the jump to cloud computing systems and haven’t yet adopted an IoT ecosystem. Further, their transition from conventional office layouts is still in its infancy. As these factors congeal, understanding of the role facilities management plays will likely follow.

Integration of facility management with legacy ERP systems

Legacy enterprise resource planning (ERP) software still reigns supreme in larger businesses. Unfortunately, legacy ERP platforms don’t account for the workplace as a value stream. Switching to an Integrated Workplace Management System (IWMS) or Computer-Aided Facilities Management (CAFM) software comes with resistance—and integration is difficult due to the walled-garden nature of most enterprise software solutions.

Lack of skills and expertise

Even seasoned facilities managers are catching up to the facility management tech boom. Most workplace management and space planning platforms are new and those with deep experience in culling analytics from them are few and far between. Moreover, there’s a lag in shifting philosophies—facilities management is no longer reactive. Approaching the workplace from a value-add standpoint is still gaining traction. Qualified professionals will soon flood the field, but it’ll take several years to educate and train them.

Despite these headwinds, facilities management is a thriving market. The benefits of good workplace management are simply too powerful to deny. And, as the call for facilities management grows louder, these headwinds will dissipate.

An evolving industry to watch

There’s no doubt facilities management plays a role in future economic development. Companies will be more strategic in how they run their businesses and manage their workforces based on how they moderate their facilities. With more technologies to quantify the workplace, the demand for interpreters of this data is also on the rise. Facilities management is becoming a crucial part of every business, and facilities manager is a position that’s highly coveted.

Keep reading: selecting facility management software.