EnergyPal: The market must invest in innovation and develop worker qualifications

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, according to Lucian Anghel, Founder and CEO, Facilities Management Services (FMS) & EnergyPal Romania.

2018-04-12 13:38:09

"Other change drivers are linked to players restructuring and clients redistribution," he told The Diplomat-Bucharest. "In 2017 the start was a little slow, especially in the first quarter, but by the end of the year it 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 per cent in Bucharest) set for delivery by year-end."

According to Anghel, facility management is still a developing market in Romania: "It's a market that is coming closer to maturity and a better segmentation based on type of property or portfolio. That 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 always approaching. 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."

In his opinion, 2017 was a 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," Anghel said. "But, in the last few years cities like Timisoara, Cluj, Iasi, Brasov, Sibiu, and Constanta had constant growth as well, due to their industrial, logistics and office developments. According to data from CBRE, in 2017 Bucharest managed to absorb 54 per cent of total leasing activity, followed by Timisoara (12 per cent), Pitesti (ten per cent), and Cluj-Napoca (six per cent)."

Anghel also said that big companies choose to develop warehouses or even factories in some of the smaller cities like Slatina and 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."

Regarding the market evolution in 2018, Anghel mentioned 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," he explained. "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 a few will survive the second year. The growth for 2016 in the support area services was 18 per cent. The real estate companies will extend their portfolio, supplementing property management with facility management, but mainly project-based and just to their already existing clients. The most important things for every player in this market will be to provide professional services, to respect promises, to have a real partnership with the beneficiary."

According to the quoted source, the FM market is growing every year mainly because of the companies which outsource these services for cost efficiency.

"These companies understand that they cannot sustain the cost and the infrastructure and continue to do the FM with in-house resources," Anghel underlined. "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. Most of the buildings are growing older than ten 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 equipment and ensure an up time of 99.99 per cent to 100 per cent. 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."

As Anghel explained, 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 professionally-made and only companies that are able to prove such professionalism and cost efficiency are chosen. The price is still important but not as a single factor. Working procedures, qualifications, response time, and added value for the client are highly appreciated. That is what drives all positive energies to win–win situations. This is the foundation of a healthy growth for both businesses. Additionally, we cannot avoid talking about 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 in the right direction. We are pretty sure that these opportunities will go on for 2018 and the years to come."
Furthermore, the market needs serious investments in innovation as well as developing worker qualification and knowledge 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, according to Anghel. "The traditional big companies are losing parts of their portfolios due to the lack of flexibility and long response time," he added. "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 to work in partnership with the beneficiary regarding the measures with long-term effect on the budget. Unfortunately, until now the cost-cutting pressure compelled the beneficiary to contract the cheapest service, with negative results for the long-term approach."