UK Bundled FM Outsourcing Market at Current Prices
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The Facilities Management market has shown good growth since the
early 1990’s, influenced by the desire to control operational
efficiencies and costs across a wide variety of sectors, as well as
more recently a trend within the private sector for companies to
refocus their business to concentrate on core competencies. This
report is focused on the market for outsourced 'bundled' services
and TFM and within this context, the market value in 2007 is
estimated at around £14bn.
Since the turn of the millennium, the FM outsourcing market has
benefited from the buoyant state of the economy, as well as public
sector developments funded through the Private Finance Initiative (PFI)/
Public Private Partnerships (PPP), with the development of the
market since 2002 illustrated in the chart above. A key factor
influencing market growth in recent years has been the trend to
outsource an increasing array of services, with a gradual shift
towards ‘bundled service’ and TFM contracts adding to contract
values.
The market is now approaching maturity in a number of sectors such
as corporate offices, retail and most Central Government
Departments. As a result of the more limited potential for increased
penetration, growth over the short to medium term is likely to be
significantly influenced by the current economic downturn.
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Some growth
will continue to be supported by investment in the public sector, with the
‘Building Schools for the Future’ programme a key area of opportunity.
Other areas of opportunity are likely to arise from investment in social
housing, regeneration schemes and developments in connection with the 2012
Olympics.
However, a potential threat to PFI/PPP, which is being
used to fund a number of these schemes, may arise from the current credit
crisis in global financial markets, as it will be harder and more
expensive for potential bidders to raise finance. Elsewhere, rising fuel
costs and legislation relating to energy efficiency will also support
growth of FM providers with specialist expertise.
Many of the companies operating in the FM outsourcing
market have their origins elsewhere, emerging from the construction,
engineering, support services and property management industries. This
trend has been especially prevalent in the construction sector, stimulated
to a significant extent by the emergence and growth of the PFI sector.
Another key factor influencing market entry has been the trend for
customers to seek ‘one-stop-shop’ solutions, with this factor also
encouraging support service providers to diversify into Integrated FM. As
the market has continued to mature over the last few years, the number of
new market entrants has slowed significantly. Indeed, the FM market has
recently experienced an unprecedented number of mergers and acquisitions,
as well as number of business failures and market withdrawals.
While opportunities in the corporate sector are likely
to be adversely affected by the present economic downturn, there remain
opportunities for some further growth over the longer term. In particular
the market is likely to receive a boost in the run up to the 2012 Olympics
especially in the hotel and leisure sector, with retail and office
developments also forming part of the massive Thames Gateway regeneration
scheme. In addition there is likely to be some growth in the less mature
shopping mall sector especially once the retail sector starts to recover.
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