At the same time, occupiers expect more. Reliability, comfort and seamless workplace experiences are no longer differentiators — they are baseline expectations.
As a result, building operations are no longer functions of cost control. They are becoming central to how value is created and sustained in commercial real estate — increasingly shaping a building’s competitiveness, its ability to retain tenants and its long-term asset value.
Cost pressures are becoming structural
Facilities management (FM) costs already account for a significant share of a building’s operating expenditure, particularly across office and mixed-use assets. Our latest report estimates suggest these expenses can represent between 25% and 40% of an office building’s total operating costs.
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But the drivers of these costs are evolving in ways that are unlikely to reverse.
Singapore’s Progressive Wage Model is lifting labour costs across cleaning, security and related maintenance services, which will raise wage levels for frontline FM roles over the next few years and outpace inflation.
At the same time, a tight labour supply for technical roles is adding further upward pressure. Overlay this with rising energy costs and carbon taxes, as well as ageing building systems that require more frequent and costly maintenance, and it becomes clear that these are not short-term fluctuations. They represent a structural reset in the cost base of building operations.
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In this environment, simply absorbing or passing on costs is increasingly unsustainable. A fundamental rethink of how facilities management is delivered is required.
From maintenance to performance
The traditional FM model is now being challenged. Owners and operators are shifting towards performance-driven approaches that prioritise outcomes over activity.
The focus is now on results — system reliability, energy efficiency, tenant satisfaction and operational uptime. This shift reflects a broader transition from reactive maintenance to proactive asset management. It recognises that well-run buildings experience fewer disruptions, more stable operating costs and stronger tenant engagement — all of which support asset value.
Integrated facilities management (IFM) is an important step in this direction. By consolidating services under a single accountable provider, IFM reduces fragmentation and improves coordination. However, the real transformation lies in moving further towards outcome-based models, where incentives are tied to measurable performance.
The changing economics of building performance
Technology is acting as an accelerator for this transition. The growing adoption of smart building systems, sensors and AI-driven platforms is giving owners unprecedented visibility into how assets operate. Instead of responding to failures, operators can increasingly anticipate and prevent them, optimising maintenance cycles and reducing downtime.
In some cases, these tools are already delivering measurable results. AI-enabled optimisation has been shown to reduce energy consumption by more than 10% in large commercial buildings, improving both cost efficiency and sustainability performance.
Critically, this might change not just how buildings are run, but how they are valued. Operational data is becoming as important as physical specifications in assessing asset quality.
Operational performance as a differentiator
For investors and owners, the implication is clear: operational performance is becoming more closely linked to long-term asset positioning. Buildings that can operate more efficiently, adapt more quickly and deliver more consistent occupier experiences will likely be better positioned to remain competitive in the years ahead.
Singapore’s broader push toward greener and more productive buildings is also creating additional momentum for operational transformation. Government support schemes aimed at encouraging integrated facilities management, energy optimisation and digitalisation are helping accelerate adoption across the sector.
A shift in how value is created
Commercial real estate has always evolved in response to changing tenant expectations and market conditions. What is changing today is that the experience of a building is increasingly being shaped not just by its design or location, but by how effectively it is operated behind the scenes.
Facilities management, once viewed primarily as a cost centre, has become a strategic lever for unlocking and maintaining sustained asset value.
The buildings that will stand out in the years ahead are unlikely to be those defined by location alone. They will be the ones that consistently deliver better-performing, more resilient and experience-led environments, enabled by integrated, outcome-focused facilities management.
Natalie Craig is CEO of Cushman & Wakefield Singapore
