Opinion

After inauspicious beginnings, facilities management is now a well-respected sector that’s an essential part of the property landscape, says Jenny Davey

It was in 1998 as a junior reporter for Property Week magazine that I first learnt about facilities management or ‘FM’ as it quickly became known.

The buzz in the surveying world was all about how much money could be made from getting private companies who wanted to save money to outsource the running of their buildings to a third party, so they could concentrate on their core business.

The logic was simple, why have a huge internal infrastructure, with lots of people to run your offices? Surely, it would be much better to pay a private company, which specialised in the field, to do it all for you and hopefully conserve cash.

Back then FM seemed like a new idea. It quickly took off in a big way, and even government departments like the Inland Revenue decided to outsource their FM (and go the whole hog and sell their property estate to a Bermuda-based company, Mapeley). But there were inevitable teething problems with the growth.

It didn’t take long for stories to circulate of FM companies charging £10 to change a lightbulb. And the Inland Revenue debacle
(it landed itself in hot water with the 
National Audit Office, who argued the taxman should not be saving money by dealing with an offshore company) quickly led to a rethink about the value of these kind of outsourcing deals.

FM never struck me as a particularly exciting sector – particularly when set against some of the more glamorous of property activities, such as buying and selling trophy buildings. But 
I have come to realise it is an activity of critical importance.

Perhaps, as is so often 
the way with all of us, through my own micro experience of FM.

In these chastened times, I discovered that Countryside Properties, the freeholder to my apartment, had sold off the freehold to a ground rent company, who then planned to cancel the contract of our managing agent – 
a major national chain – and replace them with a start-up business with no track record.

It quickly emerged that the two full-time staff who run our concierge service on site and manage the apartment development didn’t even have contracts and my block did not have valid building’s insurance even though the residents are each shelling out thousands of pounds in service charges.

The day-to-day running of an apartment development can often seem trivial when we all have such busy lives. But if the management of a building is done badly, it can mean the difference between a private residential owner being destitute if there is a fire or other catastrophe and being sufficiently covered by insurance.

In the commercial world the stakes are on a much bigger scale. In the corporate world, it seems that FM has grown up. These days, it is an essential part of the property landscape and most corporates outsource at least some element of their facilities management.

And FM companies have also become increasingly aware that they really have to prove their worth, because corporates have long wised up to the wheezes to bump up fees.

There is still vast money to be made from FM as HSBC’s decision in December to award a £200m contract to Interserve to manage 1,600 retail sites and 120 office sites across the UK, Channel Islands and the Isle of Man proves.

And today it is telling that 40% of revenues at global surveying giant CB Richard Ellis come from occupier services.

As companies continue their ever increasing drive for cost savings, the market will no doubt carry on expanding apace – let us hope that as it grows, the quality of service keeps up.

Jenny Davey is City Editor of The Sunday Times covering retail, property and private equity