World's a Great Big FM Onion

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08 January 2016 | Updated 01 January 1970

AMA Research has published its 4th edition of the Facilities Management Outsourcing - Corporate Sector Report – UK 2015-2019 Analysis.

The report offers a view of this substantial market, focusing on the outsourced management and delivery of non-core services within corporate end-use sectors including commercial offices, retail, entertainment & leisure, manufacturing & warehousing, energy & utilities and privatised transport services.

There is a specific analysis of the FM outsourcing market within the corporate sector, sector sizes and trends, key market influences, penetration of FM outsourcing, mix by end-use sector, forecasts and potential opportunities as the market sector recovers.

Trends

The comprehensive report looks at what it terms are ‘positive future prospects’ that are influenced by the apparently improving economy, growing added value opportunities, greater use of integrated FM services and more international contracts.

Other aspects dealt with are macroeconomic factors, diversification in service provision, increasing maturity in a number of end-use sectors, trend towards TFM and ‘bundling’ and legislative influences.

In 2015, the market value for outsourced ‘bundled’ services and TFM within the corporate sector was adversely affected by the decline in construction across a wide range of private sector markets between 2008 and 2013 but more recently, the market has seen some improvements in terms of number of contracts, business confidence levels, a generally improved economy and good growth in the financial and service sector. This has led to reasonable growth in the market and optimism for good growth over the next few years.

Nevertheless there remain sustained pressure on margins, reflecting consolidation in the market and greater numbers of larger FM contractors that are intent on ensuring they win enough business to fill their capacity.

Inflationary pressures

There are expected to be inflationary pressures from the introduction of a compulsory Living Wage in 2016, perhaps squeezing the contractor margins, particularly in the public sector where budgets remain under pressure.

In any event the report states that ‘this is likely to create some inflation in the marketplace’. Some of the growth forecast from 2016 onwards incorporates an impact from this change.

Energy management

However, there are greater pressures to create efficiencies through both cost and energy savings. Energy management is commonly incorporated in FM contracts with providers likely to become key players in the delivery of energy/carbon reduction and this may favour specialists with expertise in energy management.

Growth sectors

Commercial offices represent the largest end use sector accounting for over half of the market by value, followed by the retail sector. The leisure & entertainment sectors also account for a significant share.

The report finds that certain sectors of the corporate FM industry are likely to offer greater opportunities than others, in particular the office sector in the south east of England is continuing to show good growth. The leisure sector is expected to continue growing though the retail sector remains under pressure from the growth of the internet and the Omni-channel and Multi-channel operations. This seems likely to limit the opportunity for substantial new developments of larger scale retail parks, though it may create opportunities in the warehousing sector.

However, facilities outsourcing within the corporate market is considered to be mature across most sectors with around 75% of services by value thought to be outsourced in some way. Commercial offices and retail are approaching saturation point and as such, growth is largely reliant on expansion of these sectors.

Picture:   AMA’s latest report on FM outsourcing looks at the opportunities and challenges in various sectors

Article written by Brian Shillibeer | Published 08 January 2016

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