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The state of our industry

3d rendering business meeting and working room on office building

As we move through 2021 and recover from the pandemic, the Workplace Services industry is meeting an entirely new set of challenges. The traditional office moving, installation and warehouse services that make up Workplace Services were very below the radar. We have now been thrown into the spotlight and challenged to bring innovative solutions to a changing market. While still a very small element of the construction budget, our services are now at the forefront of establishing the “Return to Office” environment.

The elements of our industry that are most affected include labor, technology, inclusivity/diverse spend and warehousing. This document will address the immediate challenges, expectations and possible solutions for all categories. Our intent is to provide insight to the challenges that lie ahead for the enterprise client as well as the variable projects that are completed on a more local basis.

Move and Installation Labor

As with most of the economy, our industry is being challenged by a severe labor shortage as corporate clients return to work, or prepare for their employees to return to work. We have spent much of the last year preparing and strategizing with our clients on potential projects and solutions with little execution of projects until the last 60 days or so. Recruiting quality new labor to our workforce has been a challenge for the last couple years but has now taken a leap in to another level of concern. The factors that are severely limiting our recruiting efforts include:

• Supplemental unemployment benefits

• Increased minimum wage and hiring bonuses for less physical jobs i.e. McDonalds

• Spike in demand during an already seasonal industry peak

• Commercial demand that exceeds 20% of expected volume

The effects of the first 2 bullets are quite popular views and being experienced by most employers in all industries. The third bullet is one that is mostly unique to our industry. While Precision Facility Group and our Office Moving Alliance Partners (OMA) are Workplace Services focused, most of us have traditional household goods moving divisions. May-August present the single busiest time in that element of our industry. With that, comes tremendous competition for labor. The commercial moving and installation focused companies and divisions are bound by contractual rates while residential moving can raise rates in a more market supply and demand fashion.

Adding to an already increased seasonal labor shortage is a commercial demand that has exceeded expectations by over 20%. As the summer demand decreases, we are expecting more companies to begin to return to the office. This means an increased volume of MAC and Projects to support them. The decreased residential demand will most certainly be absorbed by the increased commercial demand. The industry can expect the labor challenges to be a major factor well into the fall of 2021.

Workplace Services targets both the variable and enterprise solution driven client. Quality partners strive to be very responsive to immediate client requests. Our long-term client relationships depend on our ability to resolve issues in a short period of time. While historically, our teams could respond in very short time frames, our industry is now scheduled with work as much as 3 weeks in advance. Areas of the West Coast are seeing full schedules as much as 60 days in advance. It has severely challenged industry response times and forced us to look outside our typical vetted resources. With all of this comes increased risk and potential increased costs. During this challenging market, we highly recommend communicating potential needs farther in advance than normal. Managing your projects with expanded timelines and staying close to your valued suppliers is more important now than ever.

In summary, it is our view, that as a procurement professional, you should expect to see, in the near and midterms, an inflationary period for labor rates. Our industry has not experienced significant increases in labor rates. Actually, over the last 20 years, we have seen very little incremental jumps in industry rates. This is not expected to be the trend moving forward. With little increase in labor supply, the demands of large clients returning to the office, rising fuel costs, and increased overhead expense, the industry should expect to see significant increases in rates as new contracts are negotiated. Some areas of the country will be more harshly affected than others but all regions are experiencing some impact.

Technology Demands

This is an area where we believe the client will see increased value from providers in the years to come. Our industry has historically had very little to offer from increased technology value. All large Workplace Services providers have been continually challenged by clients to increase our value offering with better technology that increases visibility and validation of the projects and services we execute. The results have been small and incremental with little to offer the client and more based on operational and fiscal tracking.

In the last year we have seen an increased interest and demand from large clients to provide true real time insight in to project status, verifiable chain of custody, validation of completion and detailed data reporting. Much of this demand arose from the need to provide exceptional level service during a time when we were all challenged by travel restrictions with decreased visibility. The tools needed to succeed were not efficiently available. A new approach was needed to respond to that need. This is an area we are positive quality partners can provide a unique approach to clients when delivering value add opportunities to its clients. The technology has been developed and tested. Companies with a focus on providing true value, not just labor and trucks, have technology available to deliver the next level service clients have been requesting.

Requirements like these are not available in standard software packages without extreme expenditures to customize. This then becomes cost prohibitive to an industry that operates with a large overhead and small margins. Custom solutions that are easily and quickly adaptable to changing requirements from clients are an absolute must. We believe that very few in our industry are prepared with the knowledge and expertise to provide these solutions. We know the objective is to deliver consistent high level results for clients throughout their portfolio. We will all continually be challenged to deliver at a high level with less resources and reduced costs. Technology tools must increase the visibility of project status and provide validation to quality on completion of the scope of work. We believe this can be done and will severely reduce travel costs while increasing CRE Project Managers’ scalability.

For the large enterprise client, the list of qualified suppliers that can provide the expertise, historical proof of success and technology to support, is shrinking. It is our view that the future of our industry will be made up of 3-5 potential partners that can support this level of service on a national and global scale.

Diversity Spend

While MBE/Diversity spend requirements have been increasing, the last year has seen a much increased focus on finding solutions to increase inclusivity of a wider breadth of suppliers. Our team is receiving weekly requests to assist clients in finding quality solutions to help them achieve their goals. The quality suppliers in our industry have been ahead of this for several years. The high level providers have been building a team of partners to address the multitude of services our industry provides. If a company has been committed to inclusivity, they will have a network of trusted partners to deliver the right model. Whether a client wants Tier 1 spend or is ensuring that all suppliers are participating in a culture of inclusivity with Tier 2 spend, quality providers in our industry should already have a model built to provide a solution. We see this as a tremendous opportunity to be a part of assisting historically disadvantaged companies with growth opportunities.

Warehousing

Amazon and the pandemic have had an astronomical impact on the availability of warehousing. These two factors have forever changed the warehousing. Clients with short notice warehouse demands are finding it to be an incredible challenge to fulfill their needs. Our OMA network of partners has fortunately been able to most solve this challenge due to our shear warehouse square footage supply. We do expect this challenge to increasingly worsen as demand is exceeding construction by a large margin. The days of JIT (Just-In-Time) inventory are being challenged by the day, as suppliers cannot get product through their Supply Chains. Inflationary impact on square footage rates is being experienced on a monthly basis at this time. It is only expected to increase for the foreseeable future.

Hopefully this information provides you with some helpful insight into the state of the commercial moving and logistics industry. It has been and will continue to be a challenging time for both client and suppliers as we move forward to 2022. Now, more than ever, it will be crucial for the CRE industry to closely partner with Workplace Services and logistics providers to plan and execute projects at a level that exceeds our client’s expectations.

We will continue to provide industry updates to keep you informed of the significant changes on the horizon.

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