Smart Buildings

Global Digital Workplace Market Consolidation Trend Intensifies

Mergers and acquisitions (M&A) continue to be a key growth strategy for established players providing solutions in the commercial office market, allowing them to augment their portfolio offerings to match the dynamic landscape. Our market analysis finds that M&A activity in the sector has seen an unprecedented rise since 2018, long before COVID disrupted workplaces and the economy. While some commentators expected the pandemic to cause a decline in M&A in 2020, other analysts, including Memoori, predicted the increase we ultimately saw over recent years. The relentless consolidation in the sector is a key force shaping the future of the global workplace market. “In our previous report, we tracked 49 acquisitions in this space in 2018 to 2019, 17 with transaction values amounting to $4.6 billion in total. However, ​​in the last two years, we have identified a further 62 acquisitions in the digital workplace space,” our new research explains. “Consolidation has continued to intensify, as workspace management and workplace […]

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Mergers and acquisitions (M&A) continue to be a key growth strategy for established players providing solutions in the commercial office market, allowing them to augment their portfolio offerings to match the dynamic landscape. Our market analysis finds that M&A activity in the sector has seen an unprecedented rise since 2018, long before COVID disrupted workplaces and the economy. While some commentators expected the pandemic to cause a decline in M&A in 2020, other analysts, including Memoori, predicted the increase we ultimately saw over recent years. The relentless consolidation in the sector is a key force shaping the future of the global workplace market.

“In our previous report, we tracked 49 acquisitions in this space in 2018 to 2019, 17 with transaction values amounting to $4.6 billion in total. However, ​​in the last two years, we have identified a further 62 acquisitions in the digital workplace space,” our new research explains. “Consolidation has continued to intensify, as workspace management and workplace experience has taken center stage in the built environment, with 39 acquisitions completed in 2021. With a further seven relevant acquisitions in the first six weeks of 2022, the pace of acquisitive growth continues to ramp up.”

The digital workplace market consolidation trends have not been limited to one or two segments but have been felt across the sector. The major facilities management software and IWMS companies like MRI SoftwareFM:SystemsiOffice, and Planon, for example, are leading the drive to acquire workplace specific technologies. Whilst dedicated real estate service firms, such as JLLVTS, and CBRE, have also continued to expand their smart offerings and technology leadership in corporate real estate through strategic acquisitions that develop their digital presence.

“Acquisitions and mergers have also been undertaken between competing players in order to achieve critical mass and to join forces in this competitive environment. The merger of ArchibusSpaceIQ, and Serraview with iOffice is the major example in the IWMS space,” explains our report, which details every significant acquisition in the market in recent years. “M&A activity in workplace experience apps and platforms was significant, with 13 deals in the last two years. This increase in consolidation is a strong confirmation of the recent emphasis on user-centricity in office buildings and the role that occupant experience is now playing in the workplace.”

Despite this ongoing consolidation, the number of companies in the digital workplace sector has actually shown a 30% increase in the last two years. Our comprehensive analysis shows that the pandemic has accounted, at least partly, for the increase in the number of new entrants to this market, as providers were able to use software and indoor location technology to offer solutions for physical distancing and virus-related space allocation compliance. Many vendors that were not specifically focused on the digital workplace market before the pandemic, have now either pivoted or expanded their offerings to target the commercial office space. These new and adapted market entrants, in addition to existing players and ongoing consolidation across the sector, has created a complex and fragmented market for buyers, however.

“Overall, the fragmentation of this market makes for a rather confusing competitive landscape for the buyer, with many vendors of point solutions and platforms vying for attention. However, market consolidation is happening, as the recent acquisitions confirm,” notes our Global Digital Workplace Market report. “Solution providers to the commercial office buildings sector originate from various distinct market sectors. Established incumbents from the commercial real estate, facilities management, lighting, building management, office equipment and safety and security sectors are competing with niche SaaS players and indoor positioning startups as well as major IT networking and telecommunications companies.”

The pandemic will continue to drive health and safety measures that demand the adoption of more digital workplace technology. COVID will also continue to drive remote and hybrid work trends that encourage the downsizing and reorganization of office space, which also supports the demand and growth of workplace technologies. Due to continued demand, new entrants, and established players from numerous adjacent sectors, we should expect consolidation to continue at a rapid rate in the coming years. Workplace experience and occupancy analytics platforms will play an increasingly crucial role in facilitating data-driven facilities management and IoT-enabled human-centric spaces for a new generation of building occupants.

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