Facilities Management Costs Expected to Moderate After 2022 Spike

Facilities management (FM) costs are expected to increase 2.5% in the U.S. in 2024, down from a forecast gain of 3.3% in 2023 and a 7.6% increase in 2022, according to a new report from CBRE’s Global Workplace Solutions (GWS) business. While an expected recession in early 2024 will ease contract costs, FM costs will still increase due to tight labor markets with wage-growth forecasts at 4%.

The report, titled Facilities Management Costs Trends 2023, analyzes the factors that influenced FM costs from January 2022 through May 2023 and projects the expected full-year cost changes for 2023 and 2024. It shows that FM cost inflation peaked in 2022 in the U.S. reaching an average of 7.6% year-over-year growth, compared with 2.5% pre-pandemic.

The cost of managing and maintaining facilities across various industries and regions rose sharply in 2022, driven by labor shortages, input price hikes and energy volatility. However, though oil prices rose earlier this year, natural gas and coal prices have softened substantially with total U.S. energy costs forecast to decline 27.1% this year. In addition, global supply chain rebalancing has helped drive down inflation rates, and therefore the cost of FM, in many countries.

"Lower inflation rates across the FM industry this year has been a positive trend, following the unprecedented cost challenges in the industry in 2022," said Carrie Thompson, Vice President of GWS Insights. "Looking ahead to 2024, FM cost inflation could return to normal levels in many countries, but significant risks are lurking. Our report provides a comprehensive and forward-looking analysis of FM cost trends and drivers and offers practical insights and recommendations for managing FM cost risk in different geographies."

The "Facilities Management Cost Trends 2023" report is based on data from CBRE’s proprietary FM Cost Index created by CBRE’s Strategic Investment Consulting, Global Workplace Solutions (GWS), Procurement and Facilities Management (FM) teams. The report describes the historical and projected movement of the index across global regions and enables meaningful discussions with decisionmakers, informed by objective data regarding changes in facilities costs. For more information, please visit www.cbre.com.