Market Trends of Central and Eastern Europe (CEE) Facility Management Industry
Commercial Buildings to Witness Significant Growth Across the Region
- Commercial entities cover office buildings constructed or occupied by business services, such as corporate offices of IT and communication and other service providers. Due to the provision of necessary fitments, interiors, and commercial buildings, decoration and management have gained significant importance, driving the country's commercial sector market.
- According to the European Public Real Estate Association, as of September 2022, the value of commercial real estate in Poland was estimated at around USD 235 billion, the record value in the observed period. Such huge market value of commercial real estate may be due to the rise in the construction of commercial buildings, creating growth opportunities for the market studied.
- With the acceleration of digital transformation and the booming IT sector, global firms are establishing their corporate offices in the country, thus fostering the need for facility management services. In addition, more IT companies are emphasizing expansion plans in the country owing to the availability of talent and a favorable business environment.
- According to the Hungarian Central Statistical Office, non-residential construction permits gradually increased from January 2023 in the country, when construction permits accounted for 230 and increased to 384 in March 2023. The gradual rise in construction activities in the region is expected to increase the demand for HVAC equipment and significantly create an opportunity for hard and soft FM services.
- The demand for office spaces in cities like Bucharest increased significantly in 2022, reflecting a 5% increase compared to the demand in 2021, while the overall vacancy rate in the city has decreased due to the lack of new deliveries and permits for commercial building projects during the previous year. The expansion of IT companies with new offices in the country has increased in the last few years, adding growth to the market and creating demand for commercial office spaces and related hard and soft FM services. In April 2023, the Access Group announced the opening of two new offices in Romania and Ireland to continue its international growth and deliver innovative solutions for its customers.
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Turkey to Hold Major Market Share
- According to Cushman & Wakefield, the general supply in the Istanbul office market was 6.46 million sq. m. at the end of 2022. A total of 516,789 sq. m. worth of transactions were completed in 2022, which is almost twice as much as in 2021. There was a 69% rise in lease transactions during the fourth quarter compared to last year, totaling about 163,653 sq m.
- According to TurkStat, in 2022, the occupancy permits for office buildings reached over 2.1 thousand. Such a rise in the occupancy rate of office buildings would push commercial building owners to adopt the various FM services to maintain the proper functioning of the building. These would also allow the FM players in the region to develop new soft FM and hard FM services to cater to the various needs of the clients.
- In terms of the end-user demand in the Government and Entities sector, the contribution of the public sector to the facility management market in Turkey is more significant than in any other part of the CEE region, primarily driven by the constrained budgets provided by the government that leads to the continuous outsourcing of essential facility management services. Bundled services contracts are poised to benefit from the public spending cuts, as public sector customers are looking to reduce suppliers and cut costs. This aligns with the developments in various public sector bodies that continually improve their operations.
- One primary responsibility for facilities management in retail concerns keeping the store area safe, clean, and attractive. Maintenance technicians can be assigned tasks such as cleaning floors, restrooms, and windows and assembling and maintaining product displays. At times, loading racks and other supplies may also fall to the facility management crew.
- According to Turkstat data, calendar-adjusted retail sales volume and turnover increased by 12.1% and 125.4% in November 2022 compared to the same month, 2021. At a rate of 33.7%, computers, books, and communication devices saw the most significant increase in sales volume. In terms of retail turnover by sector, online shopping led the way with a 148.6% increase. Such huge sales would drive demand for the market.
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