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£3bn sales boost for FM market in 2022 despite huge lost revenue

Open-access content Tuesday 10th May 2022
Authors
Herpreet Kaur Grewal
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£3bn sales boost for FM market in 2022 despite huge lost revenue – Image from Gorodenkoff-Shutterstock

The cost of Covid-19 will exceed £11 billion in lost revenue by 2026 for the facilities management sector, reveals a market report.

But the report on the UK Facilities Management market from MTW Research also states that prospects for the market are positive, with a £3 billion sales uplift in 2022.

The 100-page study reviews the legacy of Covid-19, highlighting near-term labour, profitability and other operational challenges but places this into context within wider positive FM market trends and opportunities, forecasting double-digit growth over the next four years.

Property technology software represents a key positive FM market trend in 2022, according to MTW, with growth in disruptive technology boosting healthy sales opportunities.

Discussing this trend, MTW’s director Mark Waddy said: “Trends in FM technology and process innovation are enabling FM providers to develop an ‘empathic response’ to service provision, boosting added value by more closely integrating with the client and anticipating their needs.”

Public sector FM grew share of the FM market in 2020/21 as commercial demand slowed in response to the pandemic. MTW identifies that this trend is now reversing in 2022, although public spending plans published in March 2022 were further revised upward by 2.8%, on top of a real terms increase of £150 billion announced in 2021. This growth, coupled with a steadily strengthening private FM outsourcing sector, underlines a fundamental strength in the FM market for the medium to longer term with MTW forecasting that the market will reach 98% of pre-Covid sales in 2022.

Despite high inflation, real-term growth is set to return in H2 2022 with full-year 2023 growth expected to outpace inflation as international and domestic inflationary pressures steadily ease. However, MTW also identifies a number of issues dampening growth prospects. One is the trend of insourcing, with caterers, cleaners, security and maintenance contractors having become so well integrated that they are viewed as the “lifeblood” of the organisation and so are adopted as employees. This trend is often also supported by unions and so has gained more traction as a result.

The report also highlights growing challenges in the TFM market, with a growing trend of FM contractors focusing on specialism rather than broad spectrum service delivery in order to develop more defined brands and enhance margin opportunities. More selective tender submissions and enhanced margin protection continue to become increasingly evident across the FM market in 2022 as the quality of service rather than volume of contracts grows in significance. Nevertheless, bundled FM services continue to dominate the market in 2022, rising by more than 13% over the entire review period.

Best-performing sectors in recent years according to MTW, include the contract cleaning market and security sectors while the property maintenance and catering markets performed generally in line with the overall FM market. By 2026, sales from these four sectors alone will generate more than £55 billion of sales in cash terms.

The report also identifies some of the more recent mergers and acquisitions and forecasts M&A action will grow rapidly in 2022, underpinned by private equity, which continues to price trade buyers out of the market.  

As private equity continues to grow its share of the FM market, M&A activity is set to rise by some 35% in 2022 compared with 2019 levels.  

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Atlas expands security team with key account manager

Atlas Security has appointed Khalid Barbary as its new key account manager.
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Friday 20th May 2022
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Green body launches circular economy drive

The UK Green Building Council (UKGBC) has opened applications to apply for the task group that will help to shape the content of the new deliverable System Enablers for a Circular Economy.   
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‘Businesses looking to expand office portfolios as working patterns evolve’, shows study

A significant majority of businesses, (68%) expect to be promoting a more regular return to the office by the middle of this year, states the latest EMEA Occupier Sentiment Survey from global real estate adviser CBRE.
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Friday 20th May 2022
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Diamond starts up EV division

Birmingham-based Diamond Facilities Support has launched a new national division – Diamond EV Solutions.
Thursday 19th May 2022
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Gov Facility Services Ltd hires interim CEO

Gov Facility Services Ltd has appointed Matthew Garner as GFSL’s Interim chief executive officer to oversee the Southern FM Prisons portfolio for the Ministry of Justice and HM Prison and Probation Service.
Thursday 19th May 2022
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UK living crisis forcing workers to reassess work life

A third of white-collar professionals have stated that they are “very likely” to leave their job in the coming months, unless more understanding and assistance is directed toward personal matters that affect their work.
Surveys
Thursday 19th May 2022
Open-access content
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