Whilst the new
commercial development scene may be subdued, specialist contractors are seeing
healthy demand for construction work on fit outs and office refurbishment.
The sector has been
buoyed up by a series of major refurbs of government offices. Some large
private sector groups are also investing to update and modernise their
commercial space.
Morgan Sindall, one
of the leaders in the sector, recently reported a 13% increase in revenues at
its fit-out division to £831 million and a record profit of £12.3 million,
which was above its target range.
But the competitive
nature of the sector was reflected in an unchanged margin of 5.3%.
The average value of
Morgan Sindall’s fit-out enquiries received last year was £2 million and around
three quarters of its projects involved refurbishing office space which was
currently being occupied. But the company has
also seen a number of large new office construction fit outs.
Major new projects
started over the past year included 220,000 sq ft of space at Royal Dutch
Shell's new multi-story office in London (Project ID 11240806), a 27-storey fit
out at the nearby Shell Centre tower and a 155,000 sq ft fit out at BBC Cymru
Wales' HQ in Cardiff.
The need to
reconfigure and modernise central government offices is emerging as a key
source of construction-related work for fit-out specialists.
Tenders are
currently being invited for a £16 million office refurbishment and fit out at
the Dept of Transport’s London base at Horseferry Road, where work is set to
start in summer 2019 and continue for 18 months (Glenigan Project ID:
19067415).
In the UK regions,
HM Revenue & Customs is proving a significant client.
Tenders have been
returned and construction work is set to start this coming August on a £20
million fit out of the HMRC Government Hub in Edinburgh and continue for nine
months, with Turner & Townsend acting as project manager (Glenigan Project
ID: 18391814).
Tenders have also
been returned on a £20 million fit out at HMRC’s Cardiff office with work set
to start in July and continue for 20 months (Glenigan Project ID: 19067476).
The pipeline in the
sector is also benefiting from some significant office fit out projects in the
City of London. Overbury, which is part of Morgan Sindall, is set to start
later this spring on a £40 million fit out at the Royal Bank of Canada’s
Bishopsgate offices, with work continuing for four months (Glenigan Project ID:
18401062).
Meanwhile, bills
have been called on a £7 million office refurbishment of two offices for the
Hon. Society of the Middle Temple in EC4, which is set to get underway in
autumn 2019 and continue for 18 months (Glenigan Project ID: 18193317).
Growth in the hotel
sector is also creating a healthy pipeline of fit out and refurbishment
projects across the country, according to Styles & Wood, a major player in
the sector. The firm is benefiting as boutique hotels seek to include bars,
spas, gyms and restaurants on their premises.
Styles & Wood
also believes refurb activity by the budget hotel sector is set to pick up. The
firm is seeing budget hotel chains such as easyHotel and Yodel spending more on
improving rooms in a bid to create distinctive spaces.
