London fit out report – summer 2017

One year on from the Brexit referendum and the exact scale of the economic challenges the market will face continue to be difficult to quantify. Our summer survey shows the fit out market to be contracting moderately, with competition increasing and keener pricing strategies being evidenced. This, however, is likely to be driven by shorter-term uncertainty, rather than fundamental industry change.

Impact of clients delaying decisions to invest now being felt

The London fit out market has cooled following the Brexit result and the reduced pipeline of work is now feeding through to consultants, contractors and trade contractors. Most expect this trend to continue until there is greater clarity on what the Brexit deal may look like for business. Still, the weak pound is making London attractive to overseas investors and a spike in space uptake from technology and media firms means that the market remains optimistic.

Reduced pipeline resulting in increasing levels of competition and keener pricing strategies

Tendering conditions continue to show signs of cooling for main contractors. The reduction in the number of opportunities coming through, together with the demand from clients to be more efficient and drive down the cost of a project, means increased competition and a reduction in fee bidding levels.

Skills shortages across the fit out market are a persistent challenge

The continued skills shortage is shaping up to be the most significant challenge facing the sector, particularly as the Brexit deadline looms without any transitional deal in place. Both craft and professional skills - particularly design, commercial management and skilled tradesmen remain a concern.

Single stage tendering back in vogue

Single stage tendering is back in vogue, particularly on larger projects where there is much more appetite for competition. Although this means more opportunity for clients, the right market engagement strategy is key to securing interest.

Firm commitment to projects in advance of tendering recommended

Clear messaging to the market is important in securing the best teams, both from the consultant and the contractor side. The more that clients can do to provide visibility of their pipeline and communicate with the market, the more successful the procurement exercise is likely to be.

More information

For the full analysis and insight, download the full report here.

If you would like to discuss the London fit-out report or any of the topics covered, please contact Director Colin Wood, or your usual Turner & Townsend key contact.