Europe Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Europe Facility Management Market is expected to grow at a CAGR of 3. 72% over the forecast period 2021 to 2026. Europe is supposed to be one of the biggest outsourced markets for facility management services in terms of maturity and sophistication.

New York, Oct. 27, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Europe Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" - https://www.reportlinker.com/p06177376/?utm_source=GNW
Among the outsourced FM service type, single facility management held the prominent share of the market, with an estimate of 45.91% during 2020. However, integrated FM is expected to grow at a faster pace, with 5.54% of CAGR over the forecast period. The government and public entities segment is expected to witness the highest CAGR of 4.70% during the forecast period. The manufacturing and industrial segment are expected to register the second-highest CAGR of 4.24% over the forecast period.

Key Highlights
Europe is one of the biggest outsourced markets for facility management services in terms of development and sophistication. The region’s facility management industry operates with integrated contracts provided by significant vendors across continents and borders, and small local players focus on single contracts and single-service solutions. However, given the dynamics occurring across the region, there are increasing opportunities to leverage facility management and corporate real estate in new ways.
Across the last decade, several service vendors operating in the region have been focused on expanding their presence to leverage the increasing demand for facility management, especially with the recent trend favoring the outsourcing of non-core operations. Further, the United Kingdom has been witnessing increased opportunities to leverage facility management and corporate real estate in innovative ways, given the dynamics across the country.
In June 2019, JLL announced the launch of FacilitiesFlex, a new digital service used to transform how businesses manage their real estate assets and buildings by offering a smarter, more efficient way to run the facilities. FacilitiesFlex service is hosted on JLL’s Corrigo technology system and is also available across Europe.
The facility management industry, one of the service industries in Europe that positively affected the economic output, is likely to witness the feasible impact of Brexit during the forecast period. As a member of the EU, the FM firms serving in the United Kingdom enjoyed all the benefits by specializing in activities with a comparative advantage. The inflow of Foreign Direct Investment (FDI), including the free labor movement, supported the country’s firms to hire experts from across the European Union.
In terms of end-user demand, the contribution of the public sector to the facility management market in the United Kingdom is higher as compared to any other part of Europe. This is primarily driven by the government’s constrained budgets that lead to the continuous outsourcing of essential facility management services. Furthermore, bundled services contracts are expected to benefit from the public spending cuts, as the public sector clients are looking to reduce the number of suppliers and cut costs.
However, the public sector in the region has started demanding longer-term contracts from FM suppliers, but lack of certainty over future labor costs and materials is making them riskier propositions, which could act as a major restraint in the bidding process for the long term contracts by the players.
The facility management industry is heavily reliant on workers from the European Union. The soft FM services are principally dependent on this source of labor, and limited access post-Brexit can have meaningful implications. FM businesses, especially those holding EU contracts, are anticipated to be affected by possible changes to supply chains, migrant labor, and other regulations in the post-Brexit scenario.
The role of the facility manager is growing more and more notable and even changing from an operational to a strategic level. This COVID-19 crisis is an opportunity for the facility manager to combine the new office environment and the requirements of employees in terms of working from home into the corporate culture. Though, more compliance is anticipated, also with respect to suppliers. The focus will be more on quality and results and smaller on a fixed schedule.
Furthermore, vendors have also employed social media to engage their customers and secure their leads across the sales funnel. A notable trend in the FM market is automation. By investing in automating their procedures, vendors achieve high profits, improved efficiency, and faster growth.

Key Market Trends

Commercial Buildings Segment to Dominate the Market

In Europe, investment companies usually decide to specialize either in the residential or commercial property market. As commercial investments suggest higher cash flow potential and often provide better returns on investment, the commercial buildings segment offers lucrative opportunities, making them an attractive form of investment in the region, consequently boosting the Facility Management Market’s growth in the region during the forecast period.
The Facility Management market is witnessing multiple partnership activities between the vendors and the commercial entities in Europe. For instance, in September 2020, Hearst UK, a publisher of brands such as Harper’s Bazaar, ELLE, Cosmopolitan, and Esquire, collaborated with Churchill Group and Pareto FM for facility services in its offices in Europe. Under the terms of the agreement, the Portfolio by Churchill may oversee cleaning and event management activities, with Pareto assuming responsibility for delivering all mechanical, electrical, and fabric-related planned and reactive maintenance services and project management services.
The gaining interest in establishing smart buildings and other IoT technologies provides various opportunities for the vendors in the market to introduce IoT-based facility management and accelerate the growth for smart buildings in Europe. For instance, in January 2021, Climate partnered with Wattsense to introduce LoRaWAN devices and an end-to-end energy efficiency solution to help facility managers property owners to optimize and control energy consumption and adapt to smarter technologies with IoT integrations.
The German facility management service growth is attributed to the increasing demand for customized solutions for different in-house and outsourced facility management. Moreover, the rising number of commercial and residential buildings in major cities is further pushing demand for facility management services across the country. Additionally, rapid infrastructure development and the rising focus on integrated facility management services are anticipated to influence the studied market positively.
The market is witnessing multiple strategic acquisitions between the market leaders in Germany to capitalize on the increasing demand for digital facility management solutions. For instance, in December 2020, EQT VII agreed to sell Apleona, a leading European facility management services provider in DACH, to PAI Partners for a transaction worth approximately EUR 1.6 billion. The company supports clients with a wide range of services, amongst others, with the goal of reducing buildings’ energy consumption and CO2 emissions, and it has created a strong customer base in the region.
Modern offices with long-term tenants remain highly sought-after by investors despite all the discussions surrounding hybrid working. The growing business acumen among industry leaders and diversification of the economy from automobile industries to other avenues is expected to increase the demand for facility management services in the country.

Big Data Allows Facility Management Teams to Drive for Efficiency, Sustainability, and Cost Savings

Facility management has been evolving rapidly over the past several years, resulting in widespread changes to Europe’s industry. Facility management is undergoing a paradigm shift in the region as trends related to data, disruption, evolving amenities, and new workplace concepts are gaining traction and becoming more popular.
The trends in the European market are for a progression from single services to bundled services and further toward the integrated facilities management approach. This offers a broad scope of services and longer-term contracts, adding value, driving better quality and economies of scale, and increasing the demand for outsourced services, where specialist expertise is required.
The outsourced FM has been successfully used in various sectors, including the public sector, retail, professional services, healthcare, technology, logistics, manufacturing, and education. The areas that FM services look after vary widely and primarily depend on its type, the size of the company, and the sector in which it operates. This is not a one size fits all approach. Some organizations will only require a single service solution provider, whereas other big organizations will be looking for a bundled services offering or complete facilities management solution.
Vendors in the region have been providing bundled services to their customers that offer multiple advantages for clients. For example, PTSG, through its bundled services, provides a multi-disciplinary capability for clients. This often gives them a complete specialist services solution, with the following benefits: one single point of contact for all the services, a more focused approach toward the servicing of their assets, keeping the building(s) in first-class operational order, and associated cost savings. By offering a bundled service, the company can ensure compliance with all services provided by PTSG.
According to The Q2 2021 RICS UK Facilities Management Survey, approximately 28% of the respondents believed that the Integrated FM sector would witness the highest growth in the next 12 months in February 2021. The response rate witnessed a slight decrease as 27% of the respondents believed Integrated FM to witness the highest growth in May 2021. In Q1 2021 and Q2 2021, bundled FM and in-house services received a higher percentage of responses for growth rate. However, the integrated FM service was significantly ahead of the single FM service in the survey.

Competitive Landscape

The Europe Facility Management Market is highly competitive with the presence of diverse firms of different sizes. This market is anticipated to encounter a number of partnerships, mergers, and acquisitions as organizations continue to invest strategically in offsetting the present slowdowns that they are experiencing. The clients in this region are employing FM services to increase the ease of their business operations. The European facilities management companies must continuously innovate and strategize to gain a competitive advantage over other players. The market comprises key solutions and service providers, such as CBRE Group, Mitie Group PLC, Emcor Facilities Services WLL, Interserve Limited, and G4S Facilities Management UK Limited.

Aug 2020 - Interserve Group Limited has been awarded a GBP 4 million contract to refurbish the SciTech Centre at Barnsley College to create a new Digital Innovation Hub. Interserve Construction will be responsible for the refurbishment of the four-story Sci-Tech Centre on the Barnsley College campus to create the Digital Innovation Hub supported by The Department of Education and The Sheffield City Region LEP.
Feb 2020 - NatWest and G4S have launched the first safe in the UK with automated account crediting in an innovative cash management solution for businesses. Businesses using Intelligent Safe will be able to deposit cash into the safe throughout the day, where it is counted and validated before their account is credited daily with that day’s deposits.
Oct 2020 - ENGIE launched a new zero-carbon home retrofit model. With UK households accounting for more than a quarter of the entire UK CO2 emissions and half the market achieving an EPC rating of D or less, radical steps are required if the United Kingdom is to achieve a mass reduction in greenhouse gas emissions by 2050. The new offer utilizes the savings generated from the improvement works together with existing revenue streams and government incentives, including Energy Companies Obligation (ECO), Renewable Heat Incentive (RHI), and Grid Balancing Agreements to help finance the upfront costs of the works.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support
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