This report is
specifically focussed upon Corporate end-use application areas to
include commercial offices, retail, entertainment & leisure,
manufacturing & warehousing, energy & utilities and privatised
transport services. Accounting for an estimated 38% of the overall
market, the Corporate market for outsourced ‘bundled’ services is
valued at around £5.5bn in 2008, with the development of this
market between 2003 and 2013 illustrated in the chart left:
While growth rates for
FM outsourcing within the corporate sector were at their highest
during the early 1990’s, the market has demonstrated steady growth
since the turn of the millennium benefiting from the healthy
overall state of the economy, with high levels of consumer
spending, boosted more recently between 2004 and 2007 by an upturn
in the commercial office sector. Levels of construction output
have a strong impact on the corporate FM market, with the
commencement of FM commonly linked to the uptake of new business
premises. The market has therefore benefited in recent years from
high levels of construction activity in the office, retail and
leisure sectors. Another factor contributing to growth in recent
years has been the underlying market trend to outsource an
increasing array of services, with a gradual shift towards
‘bundled service’ and TFM contracts adding to contract values.
More recently, the
global economic crisis has started to impact upon the majority of
corporate end use sectors, with some contraction forecast for the
corporate FM market over the short to medium term. At the time of
writing this report there has been a marked downturn in both the
UK and worldwide economic situation, influenced by the global
financial crisis. The UK is officially in recession, with Q1 2009
representing the third successive quarter of negative growth.
Commercial offices represent the largest sector accounting for 54%
of the market by value, followed by retail with around 25%.
Leisure & entertainment take an 8% share, with ‘Other’ sectors
such as manufacturing, utilities and privatised transport
accounting for the remaining 13%.
Maturity in the
corporate FM market makes it heavily dependent upon the economic
climate, through its influence on the prospects for organic growth
in key end use sectors such as commercial offices, retail and
leisure. The market is therefore expected to exhibit some
contraction over the short to medium term, recovering only slowly
from 2011 as construction activity improves and new projects reach
completion. There remain some opportunities within niche growth
sectors, with casinos for example benefiting from recent
legislative changes and growth in the budget hotel sector expected
to be sustained over the next decade or so.
The last few years
have seen significant consolidation in the supply structure of the
FM market, with an unprecedented number of mergers, acquisitions,
business failures and market withdrawals. Also, the trend for
customers to seek a growing array of services under one contract
will encourage further mergers and acquisitions as the major
players seek to diversify their portfolios and strengthen their
positions.
