Shaping Tomorrow: Trends influencing the Corporate Real Estate and Facilities Management Industry in 2025

The global CRE and FM landscape faces a period of rapid evolution, shaped by economic uncertainty and a renewed focus on efficiency and value. Against this backdrop, the FM market, valued at $1.6 trillion in 2023¹ and is projected to grow significantly.

Key trends influencing CRE and FM strategies going forward include the adoption of:

• Integrated outsourced delivery models, 
• Incentivised commercial models, 
• Robust supplier performance management, and; 
• The increasing use of technology to drive innovation.

These insights are gained from our work supporting 17 global CRE & FM organisations in the last 18 months across diverse industries including Life Sciences, Energy, Telecommunications, Financial services, and Retail.

Delivery Models: Streamlined and Strategic

Driven by a need for efficiency and strategic focus, organisations are increasingly adopting global CRE standards and streamlined delivery models, often separating FM services from Real Estate and Project Management. Integrated FM (IFM) is gaining traction for its ability to unlock greater value across diverse portfolios, particularly as outsourcing trends lead to leaner internal CRE teams and a reliance on specialist suppliers. 

This shift towards integration and specialisation is particularly relevant for global organisations navigating complex management structures and technologies, where IFM systems offer a compelling solution for optimising operations and maximising cost savings. 

However, while integrated FM offers compelling benefits, it's not a one-size-fits-all solution. Organisations must ensure they have the appropriate internal management structures, systems, and retained expertise to effectively manage the complexities of integrated contracts. Key success factors include:

1. Defining Strategy Parameters: Determine the scope of outsourcing, including functions to be outsourced and retained in-house. Establish governance structures and assess technology/system/data requirements, considering whether to leverage supplier systems or develop in-house solutions.
2. Establish Partnership Credo: Define a shared purpose for the contract that both parties agree upon, fostering a collaborative partnership.
3. Outline Success Factors: Identify key success factors for contractual negotiations, transition, and ongoing delivery to ensure alignment with established principles.
4. Develop Transparent Contractual Frameworks: Create clear contractual design principles and terms sheets to serve as a reference point for both parties, mitigating potential disagreements.

Commercial Models: Collaboration and Incentives

Cost-plus, fixed-price, and cost-plus GMP models dominate the IFM space, while specialist services are typically procured through schedules of rates. Notably, there's a shift towards commercial models that better incentivise collaboration and long-term partnerships, moving away from traditional coercive penalty-based structures. This shift is evident in the emergence of new commercial frameworks that prioritise transparency and flexibility, driving both collaboration and fiscal discipline.

Furthermore, there is a growing trend towards "inverted procurement processes" that encourage clients and suppliers to work together from the outset, leveraging their combined expertise, technology, and innovation to achieve shared objectives. This collaborative approach extends to risk and reward structures, moving away from punitive measures towards a more balanced and partnership-oriented management ethos.

Transition, People and Knowledge

Successful FM outsourcing hinges on a well-structured approach to transitioning people and knowledge. This involves comprehensive documentation of existing processes and systems, transparent communication with all stakeholders, and targeted training for both internal teams and outsourced partners. Establishing clear transition plans with suppliers and ensuring robust performance management from the outset are crucial for driving sustainable outcomes.

Supplier Performance Management: Focus on Outcomes

Modern supplier performance management prioritises adaptable, outcome-based metrics that reflect evolving business needs. The emphasis is shifting from pure cost reduction to value-driven outcomes such as service quality, innovation, and technology-enabled solutions that enhance customer and employee experience. 

Crucially, KPIs must be carefully designed to provide a realistic view of both strategic progress and operational realities, avoiding a misleading "watermelon scenario" where ‘green’ positive high-level metrics mask the sentiment of ‘red’ underlying operational challenges. 

Technology & Innovation: Balancing Potential with Pragmatism 

Despite economic pressures driving a need for innovation, the adoption of technology in CRE and FM varies. While CMMS systems are increasingly common, deployment models differ, with some organisations outsourcing systems while retaining data ownership. The emergence of generative AI presents a significant opportunity to revolutionise building operations, but organisational willingness to embrace technological advancements and be ‘first adopters’ remains a key factor influencing the pace of innovation in the sector. 

Key takeaways

The CRE and FM landscape is rapidly evolving, demanding agility and strategic foresight. To thrive in this dynamic environment, organisations are encouraged to continue to:

• Embrace streamlined delivery, collaborative client- vendor partnerships, and a focus on outcomes. 
• Strike a balance between technological innovation and practicality.
• Prioritise efficiency, value creation, and strong supplier relationships, to navigate the changing landscape and unlock the full potential of their CRE and FM functions.

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References

1. "UK Facility Management Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)”, Mordor Intelligence,  https://www.mordorintelligence.com/industry-reports/united-kingdom-facility-management-market