United Kingdom Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

United Kingdom Facility Management Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The UK facility management market is expected to register a CAGR above 4.5% during the forecast period, 2022-2027. The United Kingdom is one of the largest markets for facility management services in Europe in terms of maturity and sophistication. Given the high penetration of facility management services, several service vendors operating in the country have been focused on expanding their presence to leverage the growing demand for facility management, especially with the recent trend favoring the outsourcing of non-core operations.

Key Highlights

• The UK facility management industry operates via integrated contracts provided by large vendors across continents and borders. The smaller local players focus on single contracts and single-service solutions. However, there are increasing opportunities to leverage facility management and corporate real estate in new ways, given the dynamics occurring across the country.
• Over the last decade, several service vendors operating in the region have been focused on expanding their presence to leverage the increasing demand for facility management, especially with the recent trend favoring the outsourcing of non-core operations. Further, the country has been witnessing increased opportunities to leverage facility management and corporate real estate in innovative ways, given the dynamics across the country.
• Owing to the government's constrained budget that leads to the continuous outsourcing of essential facility management services, the public sector's contribution to the facility management market in the region is significant.
• The outbreak of COVID-19 has had a mixed business impact on facility management firms, as the restrictions on the movement of people resulted in a decline in project work and a reduced level of activity across many customer sites. The major players in the market, such as Mitie and CBRE Group, were adversely affected due to the pandemic-related lockdown.
• FM providers have been experiencing supply chain disruptions, leading to difficulties in procuring materials and supplies. Also, they have found it harder to cope with staff shortages owing to various factors that include lockdown restrictions, self-isolation, and illness. However, the readily built environment has played an important role in supporting various industries from health and social care to transport and utilities and helped tackle the spread of the virus.
• Since the facility management industry is heavily reliant on workers from the European Union. The soft FM services are primarily dependent on this source of labor, and restricted access post-Brexit can have significant implications. FM businesses, particularly those holding EU contracts, are expected to be affected by potential changes to migrant labor, the supply chain, and other regulations in the post-Brexit scenario.

Key Market TrendsSingle FM Service is Expected to Witness a Significant Growth

• Working with a single facility management service provider entails primarily delegating task management to separate entities. It also entails having a different service provider for each service the organization requires, such as cleaning, reception, and vending machines. Using the services of specialized service providers has several advantages.
• It enables the customers to concentrate on their core business, while single-service providers provide effective services to customers and help operational efficiency. Having experts handle task management will result in much higher efficiency and service quality. It will also free up company employees to focus on the most important business areas while saving resources for non-core activities.
• The outsourced FM has been successfully used in various sectors, including the public sector, retail, professional services, healthcare, technology, logistics, manufacturing, and education. The areas that FM services look after vary widely, primarily depending on their type, the size of the company, and the sector in which it operates. Some organizations will only require a single service solution provider. This is driving the demand for single FM in the country.
• Vendors operating in the UK market have been offering single services to the clients, regardless of the emergence of bundled and integrated services, because some organizations still require single solutions. For example, TC Facilities Management Ltd offers single services, such as cleaning and security, across multiple sectors in more than 5,500 locations nationwide.
• According to The Q1 2022 RICS UK Facilities Management Survey, approximately 32% of the respondents believed that the single FM sector was going to witness the highest growth in the next 12 months. However, substantial respondents in the survey believed that other services such as bundled FM and in-house services are poised to see the highest growth rate in the next 12 months.

Commercial End User Sector is Expected to Hold a Significant Market Share

• The commercial end-user sector cover office buildings occupied by business services, such as corporate offices of manufacturers, IT and communication, and other service providers. Owing to this, the provision of necessary fitments and interiors and commercial buildings decoration and management has gained significant importance, thereby driving the market in the country's commercial sector.
• UK Commercial Group provides a broad range of commercial facilities management services such as commercial cleaning services, duct cleaning training, and complete facilities management across its Newcastle office. Similarly, B38 Group, a national facilities management and property support company established to meet clients' highest expectations in the commercial property sector, delivers commercial property support services, including; facilities management, property maintenance, construction, civil engineering, corporate interior fit-out, and energy services.
• The spread of COVID-19 has forced the mass closure of workspace and the implementation of work-from-home policies in most industries, especially in the corporate buildings of the IT and telecommunication sector, which negatively affected the market. However, for some businesses, the new normal initially may mean virus-proofing their offices through short-term fixes, new working patterns, and long-term design upgrades that put hygiene at the core of workplace planning. This may positively impact soft services, such as COVID-19 cleaning services, in the region.
• The market is witnessing multiple partnerships and mergers, and acquisition activities between the vendors and commercial entities in the United Kingdom. For instance, in Nov 2021, CBRE Group Inc. announced that it had acquired 60% of Turner & Townsend Holdings Limited, a United Kingdom-based professional service company.
• In March 2022, Walton Centre NHS Foundation Trust extended its partnership with ISS UK to provide security, helpdesk, retail restaurant, patient catering, healthcare cleaning services, and hospitality across both the main hospital and Sid Watkins buildings. The new contract is worth EUR 3.5 million a year for three years and has the option to extend for up to two further years.

Competitive Landscape

The United Kingdom Facility Management is highly fragmented as it is a highly competitive market with the presence of several players of different sizes. This market is expected to experience a number of mergers, acquisitions, and partnerships as companies continue to invest in offsetting the present slowdowns that they are experiencing strategically.

• November 2021 - ISS extended its partnership with Ecclesiastical Insurance for a further three years that will see ISS Restoration provide restoration services to Ecclesiastical Insurance Group, including churches, cathedrals, and heritage buildings, as well as the Ecclesiastical growing portfolio in the education and real estate sectors.
• November 2021 - JLL launched a commercial partnership and strategic investment in SFR proptech leader Roofstock. The deal includes a minority investment in Roofstock by JLL and a partnership that enables JLL to expand its service offerings in the residential sector. As part of the deal, Roofstock also purchased Stessa, an asset management software-as-a-service solution for SFR investors, which had been owned by JLL Technologies (JLLT),

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