£3 billion sales boost for FM market in 2022 – report

A new report on the UK facilities management market from MTW Research has found that whilst the cost of COVID-19 will exceed £11 billion in lost revenue by 2026, prospects for the market are positive with a £3 billion sales uplift in 2022.

The 100-page report 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.

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

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.

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