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Category Scan: Major Impact of Coronavirus on Facility Maintenance and Services

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by Beroe Inc
28 June 2020

facilities management

The coronavirus pandemic is having a high impact on the facilities maintenance and services industry. Currently, the properties are managed by about 5 – 10 percent of the total resource personnel deployed which will add up the cost for facility management companies in the short-term, according to Beroe Inc.

In the long-run, these resources are critical for the normal working of different types of properties, due to which suppliers are incentivizing blue-collar workers providing cleaning and sanitizing services for commercial & real estate properties.

Regionally, and in many locations around the world, social distancing, remote working, reduction of open public spaces with closure of schools and shopping malls are seriously impacting delivery of security services, yet the need to provide adequate security services continues. Hence more technological based surveillance like drones, CCTV etc are used instead of physical security.

Facility management companies are ensuring a minimum number of workers are posted on sites, with some companies dividing the workforce into multiple smaller batches.

Business continuity is the key for any organization and as a result, facilities management providers are changing their strategy to tackle the pandemic.

Although the short-term attention of corporates will focus on business continuity, there are significant longer-term implications for real estate decision-making – with a renewed emphasis on the ability to react quickly to a similar event in the future with a focus on operational resilience. Suppliers are maintaining minimum essential workforce at client sites, by providing incentives and other benefits like food and accommodation.

Cleaning services are highly impacted as FM companies have started building capabilities to avoid infection at client sites.

To minimize risk of infection in client sites, FM service providers have partnered with suppliers to provide a supply of masks, hand sanitizers, hand-wash and also offer ‘step-up cleaning’ or high-frequency cleaning to disinfect high-touch or high footfall areas. When buildings are closed or minimally staffed, HVAC systems have to be reprogrammed to match changes in occupancy or operational needs to avoid unnecessary spend.

Key Findings:   

  • Catering services are having a moderate to high impact from COVID-19. While many offices are in lockdown affecting demand, at the same time food demand is increasing with many providers supporting health workers and other essential service personnel.

  • As a result of COVID-19, the demand for food supplies has increased. FM companies have reinforced the existing rules for food safety, personal hygiene and infection control. Buyers have the largest bargaining power for small/medium FM service providers.

  • Due to COVID-19, the real estate companies have seen a meaningful fall off in transaction volume (supply) as measured by deals coming to market and demand. 

  • Short-term leasing activity will decline as occupiers take a wait-and-see approach and there are challenges with site inspections for capital markets activity.

  • One of the biggest food service providers in the world, Compass Group predicts operating profit is expected to be £125m - £225m lower than previously expected, and has also announced their decision of furloughing employees. 

  • Based on the last few weeks’ observations of Sodexo in China, Italy, France and the U.S., it is expected that for each €100m of revenue decline the impact on underlying operating profit is around 30 percent depending on the country and the segment.

Global supplier partnerships by ISS are helping ISS bring all consumables required for functioning of facilities management as alternative sources of supply bases have brought in more efficiency.

Aramark's uniform services division converted its manufacturing facilities to design products, re-engineer and configure the production lines, and train employees on fabricating new products like respirator and medical masks, scrubs and isolation gowns.

Cushman & Wakefield asked facility management and security workforce to stay at the sites during the duration of the crisis providing them with food and accommodation.

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