Author: Lucian Anghel, Founder and CEO, Facilities Management Services (FMS) & EnergyPal Romania
How would you describe Romania’s FM in 2017 and how does it stand compared to other countries in the region?
Romania’s facility management sector in 2017 has seen changes in terms of increased market dynamic, due to new office developments and also logistic sector growth. Other change drivers are linked to players restructuring and clients redistribution.
In 2017 the start was a little slow, especially in the first quarter, but till the end the year turned out to be a positive one with double digit growth on most of the facility management industry segments. The total leasing activity reached 700,000 sqm in H2 2017, with another 420,000 sqm in construction around the country (49% in Bucharest) set for delivery by year-end.
Facility management is still a developing market in Romania. It is a market that is coming more close to maturity and a better segmentation based on type of property or portfolio. This is why we are facing the common challenges of combining resources of all kind. The human resource is one that brings a lot of challenges to companies in this industry. Doing business these days is more than ever about people.
Technology is also another challenge that is coming towards. Old buildings must be retrofitted to meet the demands of 2018 technology. Compared to western European countries Romania has still a lot of potential in this area.
What were the main areas of the country that have seen a successful evolution last year and why?
2017 was an year with a significant expansion of industrial and offices projects. As expected, Bucharest is still the fastest developing city in the country because of the economic and strategic position it holds. But, in the last few years cities like Timisoara, Cluj, Iasi, Brasov, Sibiu, Constanta had a constant growth as well, due to the industrial, logistics and office developments. According to data from CBRE, in 2017 Bucharest managed to absorb 54% of total leasing activity, followed by Timisoara (12%), Pitesti (10%), and Cluj-Napoca (6%).
What is also very good is that big companies choose to develop warehouses or even factories some of the small cities like Slatina, Fagaras. The main reason for these positive developments is the economic growth the country has seen in the past three years and the appetite of companies operating in Romania to expand and capitalize on this growth, which cannot be found anywhere else in Europe, in spite of all other business or operational hurdles.
What do you expect for 2018 regarding new facility management companies on the market?
As I have mentioned before, there are still a lot of opportunities on the market. Any new facility management company has to come with flexibility and agility. They have to come with a new approach on the business model and innovative ideas.
New companies will appear, each specialized in one of the FM areas (e.g. cleaning, HVAC, security, landscaping) and testing the market with low prices, but only few will survive the second year. The growth for 2016 in the support area services was +18%. The real estate companies will extend their portfolio, beside property management also with facility management, but mainly project-based and just to their already existing clients.
The most imporant things for every player in this market will be to provide professional services, to respect promises, to have a real partenership with the beneficiary.
How would you describe the potential of the FM market in Romania?
The FM market is growing every year mainly because of the companies which outsource these services for cost efficiency. These companies understand that they can not sustain the cost and the infrastructure and continue to do the FM with in house resources. That is why they turn to FM professional service providers that are flexible in terms of intervention time, working hours and with a cost efficient offer.
I have also talked earlier about the technological gap that we are facing. Most of the buildings are growing older that 10 years and have to be retrofitted in order to meet the requests of 2018 technology. Smart buildings, IoT and so on are developing faster. Owners and business managers need to have instant reports of building operation costs and incomes. Facility managers also need to monitor the building and the equipments and ensure an up time of 99,99% to 100%. This means challenge and challenge means potential.
In conclusion, in 2018 there are many new projects which will be ready for rent and also old projects that need to be refurbished.
What are the main growth drivers in the FM market these days?
The growth drivers in the FM market are mainly defined by the customers and their demands. As the customers are growing in experience their requests are more and more professional and business oriented. The clients have reached a maturity and they are well informed about what to request and the level of performance they need. The tender specs are very professional made and only companies that are able to prove the professionalism and cost efficiency are chosen. The price is still important but not as a single factor. Working procedures, qualifications and response time and added value for the client are highly appreciated.
This is what drives all positive energies to win–win situations. This is the ground of a healthy growth of both businesses. We cannot avoid talking about the government support. There are a lot of domestic programs as well as European for developing new business opportunities and also financing programs that are pushing the market on the right direction. We are pretty much sure that these opportunities will go on for 2018 and the years to come.
What are the main opportunities and challenges in 2018 for the Romanian FM market?
Innovation! The market needs serious investments in innovation as well as developing people qualification and knowledge in order to meet the requirements of the market.
The opportunity is that the old FM contracts come to term and the more and more clients are willing to make a change. The traditional big companies are loosing parts of their portfolios due to the lack of flexibility and long response time. Cost flexibility depending on the client needs is one of the major challenges beside the main operational problem, finding qualified personnel.
In my opinion Romanian developers should be more present in the market. In a market where expenses are on the rise, it is really important to be innovative and work in partenership with the beneficiary regarding the measures with long-time effect on the budget. Unfortunalety, until now the cost-cutting pressure determined the beneficiary to contract the cheapest service, with negative results for the long-term approach.
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About Facility Management Services (FMS)
The founder of FMS, dipl.ing. Lucian Anghel, has experience in operating and maintaining buildings over 3,000,000 sqm in Romania. The experience gained over 15 years of facility management allows FMS’ team to provide a full range of support services for the administration, operation and maintenance of industrial buildings and facilities. FMS offers a flexible approach, but at the same time based on well-established rules and procedures. At FMS we understand that a building is actually the people and businesses in it. We work together with our clients, adapt to their organizations, to put our services in line with their short or long-term onjectives. Our goal is to become one of the ingredients of their success through expertise, professionalism, short response times, so that, with FMS’ support, our customers are one step ahead. Learn more about us on: www.tfms.ro.