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FM outsourcing estimated to have declined 6% due to Covid

The facilities management outsourcing market value is projected to have decreased by around six per cent in 2020, largely due to Covid-19 and the lockdown measures introduced to attempt to halt its spread.

This is according to a new report by AMA Research, Facilities Management Outsourcing Market Report – UK 2021-2025, which adds although FM contracts have continued to be issued within the last year, the UK economy is expected to take a severe hit, with budgets and investment decisions likely to be negatively impacted.

The effects of the lockdown measures introduced across the UK have been especially hard within several key end-users of FM services adds the report. Notable examples include retail, leisure (e.g. gyms and sports stadiums) and the hospitality industry, i.e. pubs, cafes and restaurants. Meanwhile, the curtailing of international travel has also adversely affected end-use FM sectors such as hotels.

Prior to last year, the bundled outsourced FM market experienced relatively steady growth of around three per cent per annum, with the exception of 2017 when the prevailing political uncertainty caused by Brexit resulted in a slowdown. Between 2015 and 2019, market value rose by almost 10 per cent.

The FM market is considered relatively mature across a wide range of sectors, a factor likely to inhibit growth levels over the next few years. The performance of the market remains heavily dependent upon the prevailing political and economic situation in the UK and its effects upon budgets and investment.

Fiona Watts, Commissioned Research Manager at AMA Research, commented: “It remains to be seen to what extent end-user sectors such as retail, leisure and hospitality recover from Covid-19 and the associated economic impacts of lockdown. Given that many were struggling to remain profitable prior to the pandemic, it seems likely that many companies may either go out of business or dramatically scale down their estates, thereby reducing demand for FM services.”

The report states the market for outsourced FM services is expected to recover in the years following 2020, although to what extent largely depends upon the UK economic situation.

It has been suggested in the past that outsourcing is protected from the worst effects of economic cycles to a large extent – in times of economic slowdown or recession, cost-cutting measures by clients can often stimulate demand for FM services. In times of economic growth, the number of FM contracts tends to increase.

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