Economic Impact on Facility Management: High Costs and Tight Labor

Facility managers continue to face high costs, “but stability in coming,” says ABM Industries in a recent report. “The good news is that stabilization is in sight. The Consumer Price Index (CPI) is expected to rise by 2.4% this year, which is much lower than 2021 and 2022. Prices are expected to gradually normalize, especially towards the end of the year,” says ABM.

The labor market will continue to be tight, according to the report, with 3.4% unemployment and 3.4 wage growth. “There still aren’t enough people in the labor market. And with low unemployment and high wage growth, it’s going to be as difficult as ever to attract and retain facility maintenance personnel,” the report explains.

ABM advises, “Facility managers will need to watch economic trends closely and be prepared to respond with agility. Some of the best measures you can take include: w Change your approach to maintenance from reactive to predictive. w Leverage technology to drive efficiencies and assess the effectiveness of cost-saving measures. w Stay focused on sustainability to operate a competitive facility and prepare for regulatory changes.”

An International Facility Management Association report entitled “IFMA Experts Assessment,” says, “The shock waves from the COVID-19 pandemic, ensuing supply chain disruptions, and ongoing global energy and food price crises continue to impact lives and organizations’ operations. Facility managers must consolidate operations into more experiential spaces, requiring new mindsets, business models and technologies. Facility managers face several new realities, which include the following: w Remote and hybrid work have become the norm in most offices. w Most knowledge workers no longer need to come to the office to be innovative, collaborative or productive. w Organizations struggle to entice workers back to office environments. w Some organizations and managers remain wedded to traditional work practices that require in-office work. w FM and other support functions are still assessing and coming to terms with the long-term implications of the COVID-19 pandemic. According to insights from the subject matter expert (SME) panel, the following are the key messages from IFMA’s Experts’ Assessment: The Workplace Post-COVID-19 study. SMEs: w Expect significant space reductions. w 59% expect organizations to reduce their overall real estate footprints, leverage more flexible spaces with shorter leases, and use coworking locations more. w 69% opine that organizations will accelerate using these strategies in case of a recession to consolidate footprints and cut costs. w SMEs expect that workers will likewise want to make greater use of remote work to help mitigate the effects of cost increases during the recession. w Anticipate demand will continue to shift toward flexibility and quality. w The aforementioned expectations for greater space reductions, a shift toward shorter leases and increased use of coworking will impact office real-estate demand in metro areas. SMEs anticipate demand for offices to decline in major metro areas in favor of midsized cities, where demand would be higher. SMEs do not expect a significant change in smaller metro and rural areas. w Demand will continue to shift from Class C and B building categories toward coworking and Class A locations. w SMEs expect the allocation of square feet/meter per employee on site to increase, the overall office size to shrink and the space allocated to amenities to shift. These shifts could mean that there would be an increase in the square feet/meters per work point but an overall decrease