B2B Sample Report 2024 | Redacted Version

29 FEBRUARY 2024 | REPORT
FACILITIES MANAGEMENT – UK –
2024
The highly competitive market is focusing on technology adoption, enhanced
service offerings and new emerging value propositions, which are increasingly
driven by ESG factors.
Claudia Preedy, Senior B2B
Analyst
1
Prepared for kmacnamara@mintel.com
© 2024 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel.

Table of Contents
EXECUTIVE SUMMARY........................................................................................................................ 5
Key issues covered in this Report..................................................................................................... 6
Opportunities for the Facilities Management market.........................................................................7
Market dynamics and outlook ........................................................................................................... 8
Graph 1: addressable market and forecast for facilities management, 2023-28...............................9
Graph 2: segmentation of the addressable market for facilities management, by type of contract,
2017-23 ........................................................................................................................................... 10
Graph 3: market forecast for addressable contracted-out services, by type, 2023-28....................11
MARKET SIZE AND FORECAST ........................................................................................................ 13
Market size...................................................................................................................................... 14
Market trends .................................................................................................................................. 16
Graph 4: trend in contracted-out services, 2018-23........................................................................16
Market forecast ............................................................................................................................... 18
Graph 5: forecast for addressable facilities management market, by type, 2023-28 ......................19
MARKET SEGMENTATION................................................................................................................. 21
Overview ......................................................................................................................................... 22
Graph 6: segmentation of the addressable market for facilities management, by type of contract,
2018-23 ........................................................................................................................................... 23
Graph 7: segmentation of contracted-out services, 2023 ...............................................................24
Mechanical & electrical contracting.................................................................................................26
Graph 8: segmentation of M&E contracting, by type of work, 2018-28...........................................26
Graph 9: segmentation of M&E contracting, by type of demand, 2018-28 .....................................27
Private Finance Initiative (PFI) ........................................................................................................ 28
Graph 10: PFI/PF2 unitary charges, 2018-28 .................................................................................29
Landscaping and gardening............................................................................................................ 30
Graph 11: market size of contracted-out landscaping & gardening addressable by facilities
management companies, 2019-28..................................................................................................31
https://clients.mintel.com/content/report/facilities-management-uk-2024
2

Office services................................................................................................................................. 32
Graph 12: market size of contracted-out office services, 2018-28..................................................32
Cleaning services............................................................................................................................ 35
Graph 13: market size of contracted-out cleaning services, 2018-28 .............................................36
Catering........................................................................................................................................... 37
Graph 14: market size of contracted-out catering services, 2018-28..............................................38
Building fabric maintenance ............................................................................................................ 39
Graph 15: market size of contracted-out building fabric maintenance services, 2018-28...............40
Security services ............................................................................................................................. 40
Graph 16: market size of contracted-out security services, 2018-28 ..............................................42
Other services ................................................................................................................................. 43
Graph 17: market size of other contracted-out services, 2018-28 ..................................................44
MARKET DRIVERS.............................................................................................................................. 45
Macro-economic factors.................................................................................................................. 46
Graph 18: GDP, 2021-23 ................................................................................................................ 46
Graph 19: CPI inflation rate, 2021-24 .............................................................................................47
ESG – a primary driver for corporate policies .................................................................................48
Repair and maintenance ................................................................................................................. 51
Graph 20: RMI expenditure on private non-residential buildings, 2019-23 ....................................52
Graph 21: forecast RMI expenditure on private non-residential construction, 2023-28 ..................53
Graph 22: public non-residential RMI output, 2019-23 ...................................................................55
Graph 23: forecast RMI expenditure on public non-residential construction, 2023-28 ...................56
Distribution of workplaces ............................................................................................................... 57
Hybrid workspace evolution ............................................................................................................ 59
Employee costs............................................................................................................................... 60
Graph 24: National Living Wage and real living wage, 2017-24 .....................................................61
Government policy on public sector FM..........................................................................................63
COMPETITIVE LANDSCAPE .............................................................................................................. 66
Industry structure ............................................................................................................................ 67
Graph 25: development of the facilities management sector, 2018-23...........................................69
Graph 26: facilities management M&A activity, 2019-23 ................................................................71
3

Graph 27: facilities management M&A activity, by sector, 2022 and H1 2023 ...............................72
Company profiles ............................................................................................................................ 73
Graph 28: segmentation of the European revenues of Compass Group, 2023, (%) ......................78
Graph 29: segmentation of Mitie revenues, by sector, 2022-23 .....................................................83
Graph 30: segmentation of Serco Group revenues, by sector, 2021-22.........................................85
Graph 31: segmentation of Serco Group revenues, by region, 2021-22 ........................................86
APPENDIX ........................................................................................................................................... 89
Supplementary data ........................................................................................................................ 90
Graph 32: UK government estates, tenure by floor area, 2022 ......................................................90
Graph 33: office floor space in England and Wales, 2001-23.........................................................91
Report scope and definitions........................................................................................................... 92
Methodology.................................................................................................................................... 95
4

EXECUTIVE SUMMARY
5

Key issues covered in this Report
• Analysis of the addressable market for facilities management and forecast for the
next five years
• The impact of economic uncertainty on the various service sectors
• How the growing importance of sustainability and ESG considerations provides
new opportunities for FM providers
• The growing importance of technology and data-driven services
• The performance and strategies of key industry players
Overview
6

Opportunities for the Facilities Management
market
Technology increasingly utilised as differentiator and to add
value
Opportunities presented by the hybrid workplace
7

Push to net zero and ESG strategies drive the development of
new service offerings
Market dynamics and outlook
The Five Year Outlook for Facilities Management
The below table provides an overview of how we expect the facilities management category to perform
over the coming five years in real terms. It draws on MBD's expertise in the market, market forecast and
understanding of the key trends that are driving end-user behaviour and their requirements.
Source: MBD, February 2024
8

Addressable market for facilities management and forecast
The market includes all contracted-out services (single, bundled or integrated into a full facilities
management contract), as well as an estimatedcosting based on the commercial value of in-house
services.
£
bn
UK: addressable market and forecast for facilities management, 2023-28
120
130
140
150
160
170
180
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: MBD forecasts
Trend towards outsourcing continues
The long-term establishment of the contracted-out market in the private
sector has effectively arisen from corporates concentrating on their core
activity and looking to contract out other necessary services that are
deemed ancillary to the core purpose of the business.
A difficulty for the facilities management sector has been that the primary
motivation for such decisions are cost-reduction in nature. This feature is
now evolving, with the specialisation and scale of contractor services
offering material advantages in excess of cost advantages – encouraged
by contractors looking to offer value-added propositions and
differentiating their offerings.
Many of the services offered by FM providers are also driven by stringent
regulation and have a degree of operational and technical complexity,
which also favours outsourcing.
9

Clients increasingly favour integrated facilities management
solutions
IFM accounts for around 9% of addressable FM market
COVID-related public service contracts were included in the IFM sector between 2020 and 2022, which
inflated the value of the sector. Inflationary factors have partly contributed to growth over 2022 and 2023.
£
bn
UK: segmentation of the addressable market for facilities management, by type of contract,
2017-23
Integrated facilities management Other contracted-out In-house provision
0
25
50
75
100
2017 2018 2019 2020 2021 2022 2023
Source: MBD
10

Within the overall market, there will be a consistent trend away from in-house provision to both contracted-out
services and IFM.
With public expenditure expected to remain under pressure, spending on facilities management will also come
under some pressure. However, it will also provide opportunities for the facilities management sector to improve
efficiency in the public sector – which may result in the contracting out of further services.
The private sector will see a variety of trends in its end-use markets, but, in general, the emphasis on cost
control and value creation will have a sustained market impact, stimulating greater use of cost-effective
outsourcing.
£
bn
UK: market forecast for addressable contracted-out services, by type, 2023-28
IFM Other contracted-out In-house provision
2023 2024 2025 2026 2027 2028
0
25
50
75
100
125
Market outlook is positive
Note: 2024-28 values are given at 2023 prices
11

FM providers will continue to enhance their service offering in
response to clients' evolving needs
M&A remains an attractive strategy for businesses seeking
growth
12

MARKET SIZE AND FORECAST
13

Market size
Introduction
The UK has a large, well-established and dynamic facilities management industry and the sector covers a
vast array of activities and markets in both the public and private sectors.
There has been a long-term trend within the UK for companies to concentrate on their core activity and to
sub-contract activities deemed to be outside the scope of this corporate activity. The combining of such
sub-contracted facilities has given rise to the facilities management sector with suppliers keen to cross-sell
their services and move towards full service integration.
The highly competitive FM market is seeing a growing focus on technology adoption and innovation,
enhanced service offerings and new emerging value propositions, which are increasingly being driven by
sustainability and ESG factors.
Value of the facilities management market continues to grow...
MBD identifies a potential market for facilities management of billion in 2023. This includes all
contracted-out services (whether single, bundled or integrated into a full facilities management contract),
as well as a theoretical costing based on the commercial value of in-house provided services.
UK: addressable market for facilities management, £ bn
Source: MBD
14

...as it continues post-pandemic recovery
The separate services offered within facilities management, and the vast range of end-use client activities,
have each been uniquely impacted by the pandemic. However, in total, after a reduction in performance in
2020, there was an improved level of activity in 2021, which offset the previous year's decline and took the
market above pre-pandemic levels. There were further improvements in 2022 and 2023, although
inflationary factors contributed to nominal market growth in these years.
In the public sector, some sectors (such as education) were impacted by COVID-19 related closures in
much the same way as the private sector. Against this, demand in the health sector was strong. There
were also specific contracts awarded to major facilities management companies associated with the
pandemic, such as Test and Trace, vaccination centres, and the security for hotels charged with housing
those who had travelled internationally and who were forced to isolate in hotels. The impact of these
contracts significantly reduced by 2022, when most were phased out.
15

Market trends
£
bn
UK: trend in contracted-out services, 2018-23
Contracted out In-house provision
20
40
60
80
100
120
2018 2019 2020 2021 2022 2023
Growing trend towards outsourcing
Source: MBD
16

Growing importance of Net Zero strategies and ESG
commitments offer opportunities for service differentiation
Utilisation of technology helping to improve
efficiency and add value
17

Trend towards IFM solutions
Market forecast
Outlook for FM market is positive
The addressable facilities management market is expected to show consistent growth over the next five
years. There will be an ongoing trend away from in-house provision, favouring both contracted-out services
and IFM.
UK: forecast for addressable facilities management market, £ bn
18

Within the overall market, there will be a consistent trend away from in-house provision to, favouring both
contracted-out services and IFM.
With public expenditure expected to remain under pressure, public spending on facilities management will also
come under some pressure. However, it will also provide further opportunities for the facilities management
sector as a drive to improve efficiency in the public sector – which may result in the contracting out of further
services. FM contracts will be shaped by the government's 2030 vision for public sector FM which focuses on
enhancing lives, enabling success and ensuring value.
The private sector will see a variety of trends in its end-use markets, but, in general, the emphasis on cost
control and value creation will have a sustained market impact, stimulating greater use of cost-effective
outsourcing.
£
bn
UK: forecast for addressable facilities management market, by type, 2023-28
IFM Other contracted-out In-house provision
2023 2024 2025 2026 2027 2028
0
25
50
75
100
125
Forecast for addressable FM market
Note: 2024-28 values are given at 2023 prices
19

ESG factors and technology to remain key drivers for service
differentiation
The range of outsourced services offered by the sector will continue to develop and grow in response to
client need. Areas where FM companies are increasingly offering expertise include asset optimisation,
compliance and decarbonisation. There remain substantial opportunities for facilities management
companies to respond to both employee wellbeing and sustainability issues, with the development of ESG
strategies expected to increasingly drive new and enhanced value propositions by FM providers.
Data-led services will also be a clear differentiator for technology-focused sub-contractors. Not only is
technology proving a differentiator, but it is actively contributing to decision-making data analysis that is
improving the efficiency of client operations – for instance, AI-enabled technologies can leverage vast
datasets for predictive maintenance, enabling a more proactive and cost effective approach to facilities
management. This will continue to be a significant driving force in the market over the next few years.
20

MARKET SEGMENTATION
21

Overview
FM packages
22

In 2022, the IFM market was valued at an estimated billion, although this included a billion contribution
from COVID-19 related public service contracts. In 2021, the value of COVID-19 related contracts was stronger
at billion.
COVID-19 related contracts have since been phased out and did not contribute to the market value in 2023.
Inflationary factors, however, have contributed to value growth in 2022 and 2023.
£
bn
UK: segmentation of the addressable market for facilities management, by type of contract, 2018-23
Integrated facilities management Other contracted-out In-house provision
0
20
40
60
80
100
2018 2019 2020 2021 2022 2023
IFM accounts for around 9% of addressable FM market
Source: MBD
Trend towards multi-service offering
There remains considerable potential for growth with £ billion
accounted for by other already contracted-out services that fall short of
being fully defined as IFM. Facilities management companies compete
with other specialist contractors in this element of the market. There has
been a long-term conversion from single-service contracts to multi-
service offerings, bundled together but still falling short of being fully
defined as IFM.
By defining the facilities management market to include all sub-
contracted elements, the addressable market expands to £ billion.
MBD estimates that there is a further £ billion of yet to be sub-
contracted services that fall within the remit of facilities management
companies’ services.
23

Mechanical & electrical services take the largest share of
contracted-out services market
M&E services accounted for an estimated of the contracted-out services market in 2023.
UK: segmentation of contracted-out services, £ bn, 2023
Source: MBD
M&E services accounted for an estimated % of the contracted-out services market in 2023.
£
bn
UK: segmentation of contracted-out services, 2023
M
&
E
P
F
I
L
a
n
d
s
c
a
p
i
n
g
O
f
f
i
c
e
S
e
r
v
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c
e
s
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l
e
a
n
i
n
g
C
a
t
e
r
i
n
g
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u
i
l
d
i
n
g
F
a
b
r
i
c
S
e
c
u
r
i
t
y
O
t
h
e
r
0
10
20
30
40
50
60
Source: MBD
24

Public sector facilities management
The government estate is vast and diverse, and includes courts, job centres, hospitals, schools, offices and
much more. Within these settings, FM needs to cater for the wide range of facilities and services it
supports and enables.
The considerable estate requires an estimated public spend on FM of £13 billion. The Ministry of Defence
accounts for the largest share of spend ( %) followed by the Ministry of Justice ( %) and DWP
%).
Due to long-term under-investment, along with inconsistent and varied approaches to the management of
the government estate, the condition of the estate deteriorated to the point where functionality became
affected. For these reasons, the Government Property Function is reviewing FM provision across the whole
(office and operational) government estate to improve the quality and consistency of FM services.
In November 2022, the government published its Facilities Management Strategy 2022-30, which
addresses how FM will support the ongoing transformation, increased digitalisation of public services and
developing new ways of working for public servants. The strategy sets out a 2030 vision, which focusses
on the core values of enhancing lives, enabling success and ensuring value.
25

Mechanical & electrical contracting
While commercial activity has been impacted by economic uncertainty, high borrowing costs and skills
shortages, growth in the M&E services sector has remained strong post-pandemic.
With technology playing an increasing role in the critical factors of productivity and environmental issues, this
will form a long-term impetus to market growth, especially for electrical contracting. Data centres, including new
construction and refits of existing structures, continue to gain momentum as one manifestation of the
technological impact, extending to rapidly-evolving building management technologies, decarbonisation
solutions and water conservation.
Key challenges that need to be addressed by the sector include skills shortages and the need to progress
towards net zero.
£
bn
UK: segmentation of M&E contracting, by type of work, 2018-28
Electrical Mechanical
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
0
20
40
60
80
Demand for M&E services increasingly driven by energy
efficiency and decarbonisation requirements
Note: 2024-28 values given at 2023 prices
Source: MBD
26

The end-use markets for electrical and mechanical engineering are highly-dispersed. However, with some
companies concentrating on R&M work, notably those that have defined their activity in the wider context of
facilities management, the identification of broad end-use sectors becomes important.
RMI work is expected to show slightly stronger growth than demand in the new construction sector, which tends
to be more volatile. In the near-term, growth in RMI activity is expected to be driven by buoyant commercial fit-
out activity while the decarbonisation agenda and technology adoption are key drivers in the medium to longer
term.
High growth industry sectors for M&E contractors over the coming years are expected to include life sciences,
data centres, pharmaceuticals and healthcare.
£
bn
UK: segmentation of M&E contracting, by type of demand, 2018-28
New construction RMI Infrastructure
5
10
15
20
25
30
35
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
RMI accounts for largest share of M&E work
Source: MBD
27

Move to condition-based maintenance
Private Finance Initiative (PFI)
Overview
28

The public sector entity does not pay for the asset during construction, as the associated costs of construction
are financed by the private sector. Once the asset is operational and services are being provided the public
sector entity pays a monthly fee – a ‘unitary charge’ – to the private sector provider. This payment includes the
costs of construction, financing costs, lifecycle replacement expenditure, maintenance and services.
The payment is subject to performance, which means that payments are reduced if services are not delivered to
the standards set out in the contract. This form of payment mechanism provides an incentive for the private
sector provider to meet their performance obligations and underpins the transfer of risk to the private sector.
£
bn
UK: PFI/PF2 unitary charges, 2018-28
8.
8.7
9.2
9.
9.7
1
10.2
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
PFI unitary charges
Source: ONS
29

Landscaping and gardening
Overview
Differentiated service offerings increasingly
sustainability-led
Demand for landscaping services continues to grow beyond maintenance
with an increasing focus on the environment and biodiversity. Providers
therefore need to strengthen their capabilities and offer differentiated,
sustainability-led solutions. This may include offering clients biodiversity
surveys, wild planting schemes, designing artificial habitats (eg bug
hotels, bird nests) to promote a healthy ecosystem and creating chemical
reduction plans.
To expand its presence in vertical landscaping, Mitie acquired Biotecture,
a leading specialist in designing, building and maintaining ‘living walls’.
The addition of Biotecture supports Mitie’s commitment to be the
'greenest' landscaping provider and support its customers in achieving
their sustainability ambition. These vertical gardens transform indoor and
outdoor urban spaces by improving air quality and biodiversity, while also
enhancing workspace design.
30

While landscaping services were negatively affected by lockdowns and reduced construction activity in 2020,
demand in the sector held up relatively well during the pandemic, as regular maintenance was seen as a
necessity. The market then recovered well over 2021 and 2022.
However, in 2023, the value of the contracted-out landscaping services market declined by an estimated % to
billion. With some private and public clients reining in spending amid inflationary and budget pressures,
market growth has been limited.
Going forward, growth is expected to be driven by enhanced service offerings and the growing focus to help
clients achieve their sustainability objectives.
£
bn
UK: market size of contracted-out landscaping & gardening addressable by facilities management
companies, 2019-28
5.2
5.4
5.6
5.8
6
6.2
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Landscaping services valued at £5.6 billion
Source: MBD
31

Office services
The office services market has been impacted by the widespread adoption of hybrid work models as the UK
emerged from the pandemic. This has led to an opportunity for office space to be rationalised if the number of
workers in the office is reduced and office use is subjected to rotated timetables. According to data by the VOA,
the amount of office space in England and Wales declined by % between 2020 and 2023.
While the downsizing of office footprints is having a negative impact on demand for office services, this has
been partly offset by a trend of companies increasingly turning to third-party contractors to provide efficient and
value-added office service solutions in the new world of hybrid working.
£
bn
UK: market size of contracted-out office services, 2018-28
6.2
6.
6.7
7.2
7.
7.7
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Demand for office services impacted by economic uncertainty
and reduced office space requirements
Source: MBD
32

Growing demand for flexible offices
The evolving workplace changes FM requirements
The hybrid workplace evolution is impacting how FM teams manage, maintain, clean and secure offices.
Companies need to provide modern, comfortable and collaborative workplaces for a hybrid workforce,
requiring investment in space layouts and amenities. At the same time, they need to address the challenge
of managing varying occupancy rates throughout the week. This requires more flexible building services
such as lighting, cooling and heating – often provided on the back of increasingly complex building
management systems (BMS).
FM providers, therefore, need to adapt their service offering and they can add value by helping clients
creating comfortable and modern working environments. In addition, technology solutions can be adopted
to monitor building occupancy and manage energy efficiency – this can be achieved by closing off areas or
floors that are not required on low-occupancy days. These solutions also support clients' decarbonisation
efforts, which are becoming increasingly important.
33

Growing demand for tech-enabled office
amenities
There is growing demand for technology-enabled amenities that boost
efficiency and collaboration. This opens opportunities for FM providers to
deploy PropTech tools, such as booking systems, sensors, desk screens
and mobile apps, that help companies to understand and manage the
individual office user experience. For example, Mitie's Aria app allows
users to check if desks are free, and book space, before heading into the
office and order refreshments when there.
Meanwhile, digital tools that enable sensor- and data-informed actions
can help FM companies make smarter decisions and improve
efficiencies. Solutions may include technologies that signal when
equipment needs to be maintained or updated or when a shared space
needs to be cleaned for the next user.
How FM firms have responded to the hybrid workplace
evolution
ISS launches new workplace experience company
Mitie's technology solution Sphere helps businesses design the most effective workspaces
34

Cleaning services
Recent market development
Focus on sustainability, technology and quality as service
differentiators
35

Stagnant economy continues to impact demand for cleaning
services
The UK market for for contracted-out cleaning services reached an estimated billion and is expected
to remain at this level in 2024, as economic growth remains stagnant.
£
bn
UK: market size of contracted-out cleaning services, 2018-28
6.25
6.5
6.75
7
7.25
7.5
7.75
8
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: MBD
36

Catering
Catering contractors offer advantages of
scale and specialised knowledge
Technology used as an differentiator
37

In 2023, the UK contracted-out catering services market increased by an estimated 5% to £5.9 billion.
Economic uncertainty has impacted the business and industry aspect of the market, but has a relatively low
impact in public sectors such as education and health.
According to Compass, the high inflation environment has also increased first-time outsourcing opportunities as
self-operators seek cost efficiencies.
£
bn
UK: market size of contracted-out catering services, 2018-28
4
4.5
5
5.5
6
6.5
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
High inflation has increased first-time catering outsourcing
opportunities
Source: MBD
38

Building fabric maintenance
Overview
39

The market is valued at an estimated £6.8 billion in 2023, up by 3% on the previous year.
While demand is negatively impacted by a decline in office space requirements amid the shift to hybrid working,
this is counteracted by growing demand for fit-outs with occupiers demanding amenity-rich, high quality spaces.
£
bn
UK: market size of contracted-out building fabric maintenance services, 2018-28
5.5
5.75
6
6.25
6.5
6.75
7
7.25
7.5
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Demand for building fabric maintenance set for steady growth
Source: MBD
Security services
Overview
Most contracted-out security services are very labour-intensive, so there have been significant investments
in technology in the sector by facilities management companies looking to address this feature, which
provides a considerable contractor advantage. However, the use of technology, such as CCTV, is well
established as a means of reducing manpower in certain applications and this is no longer a significant
product differentiator between contractors.
40

Rise in theft and violence increases demand
for security services in retail sector
Opportunities in public and commercial sectors
41

Custodial services
Demand for security services continues to show good growth
The security services sector is expected to show annual growth of between % in real terms over the
next five years.
£
bn
UK: market size of contracted-out security services, 2018-28
3.5
3.75
4
4.25
4.5
4.75
5
5.25
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: MBD
42

Other services
Overview
COVID-19 related FM revenues
The four major FM companies alone have seen a COVID-19 ‘bulge’ in contracts of more than £5 billion,
which cannot be expected to be repeated.
In 2022-23, the UK government's Strategic Suppliers saw their outsourcing & FM revenue drop by 39% to
£4.5 billion.
Major COVID-19 related facilities management revenues, 2020-22
Source: MBD analysis of Tussell data
43

Market size of other contracted-out services
Specific COVID-19-related contracts largely concluded by 2022 with the market returning to more
traditional levels
£
bn
UK: market size of other contracted-out services, 2018-28
Including COVID-related exceptionals Total non-exceptional
9
10
11
12
13
14
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Source: MBD
44

MARKET DRIVERS
45

Macro-economic factors
Economic growth has been exceptionally weak over the last couple of years and the UK slipped into a
recession at the end of 2023. Two consecutive quarters of contracting GDP is defined as a technical recession,
though many economists believe stagnation is a better description without a more sustained downturn.
The stagnation in 2023 reflects squeezed household finances, due to surging inflation and the highest BoE
interest rates in 15 years.
Most economists expect only a slight improvement in economic growth in 2024. In February 2024, the BoE
upgraded its forecast for 2024 growth to 0.25% – up from its previous prediction of zero growth. It forecasts
0.75% growth for 2025.
UK
GDP
(quarter-on-quarter
change)
UK: GDP, 2021-23
2
0
2
1
Q
1
2
0
2
1
Q
2
2
0
2
1
Q
3
2
0
2
1
Q
4
2
0
2
2
Q
1
2
0
2
2
Q
2
2
0
2
2
Q
3
2
0
2
2
Q
4
2
0
2
3
Q
1
2
0
2
3
Q
2
2
0
2
3
Q
3
2
0
2
3
Q
4
-2
0
2
4
6
8
Economic output has stagnated since the cost of living crisis
began
Source: Office for National Statistics
46

Although prices are still rising, consumer price inflation has fallen significantly from its late 2022 high. The
headline CPI rate shows that prices were % higher in the year to January 2024.
The broad expectation is that the rate of inflation will continue to fall, and could temporarily drop to the 2%
target within a few months before rising slightly again
Inflationary cost rises, wage inflation together with labour shortages have also caused concern for FM providers
and their clients.
Balancing clients' budget constraints with rising costs has presented a significant challenge for providers.
However, inflationary pressures have also opened up opportunities, with companies using FM providers to
reduce risk and improve operational efficiency. Inflationary pressures are now starting to soften.
CPI
%
change
over
the
previous
12
months
UK: CPI inflation rate, 2021-24
0
2
4
6
8
10
12
J
a
n
-
2
1
M
a
r
-
2
1
M
a
y
-
2
1
J
u
l
-
2
1
S
e
p
-
2
1
N
o
v
-
2
1
J
a
n
-
2
2
M
a
r
-
2
2
M
a
y
-
2
2
J
u
l
-
2
2
S
e
p
-
2
2
N
o
v
-
2
2
J
a
n
-
2
3
M
a
r
-
2
3
M
a
y
-
2
3
J
u
l
-
2
3
S
e
p
-
2
3
N
o
v
-
2
3
J
a
n
-
2
4
Rate of inflation is easing
Source: Office for National Statistics
47

BANK OF ENGLAND
BASE RATE:
%
(February 2024)
UK interest rates remain at 16-year high
The Bank of England has repeatedly increased interest rates in an
attempt to bring down inflation levels. Although it has held the rate since
August 2023, the rate remains elevated compared to recent years at
%.
Interest rates set by the Bank of England affect mortgage, credit card and
savings rates for consumers. Higher interest rates also have a negative
impact on the finances of companies as they increase the cost of
borrowing.
Most analysts think that interest rates have peaked, and will soon start to
fall, with many predicting the first % cut in June. By the end of 2025,
base rates could be down to %.
ESG – a primary driver for corporate policies
Sharpened focus on ESG reporting
48

ESG reporting standards are becoming more established
FM providers can help clients adhere to ESG regulations and
reporting requirements
49

Focus on Net Zero strategies
Growing client demand for decarbonisation solutions
50

Repair and maintenance
Private industrial and commercial RMI activity
51

COVID-19 impacted office demand with employees encouraged to work remotely. As those restrictions have
been removed, a new style of hybrid working has emerged with greater levels of shared office space facilitated
by employees combining remote work with office attendance.
Combined with the trend towards higher quality, sustainable spaces, office refurbishment activity has been
boosted as landlords adapted their properties to the post-pandemic working patterns.
In the industrial sector, the economic conditions during Brexit negotiations tended to defer investment decisions
before the pandemic, with a corresponding increased demand for RMI. Against this, the long-term trend towards
warehousing rather than factories has dampened overall RMI demand, with warehouses generally having lower
R&M demands.
£m
UK: RMI expenditure on private non-residential buildings, 2019-23
Market Indexed to 2019
10k
12k
14k
16k
18k
20k
22k
2019 2020 2021 2022 2023
Buoyant office refurbishment market boosts private non-
residential RMI activity
Note: Data reflects Great Britain. 2023 data is seasonally adjusted based on January to November figures
Source: ONS
52

Private commercial and office fit-outs are expected to continue to experience heightened demand as firms
update and upgrade their footprints to adapt to changing working practices and office space requirements.
The increasing focus on sustainability and energy efficiency will continue to bolster activity in the longer term.
£m
at
2023
prices
UK: forecast RMI expenditure on private non-residential construction, 2023-28
20k
21k
22k
23k
24k
25k
26k
2023 2024 2025 2026 2027 2028
Increasing focus on sustainability will continue to bolster private
industrial and commercial RMI activity
Note: data reflects Great Britain
53

Public non-residential RMI activity
54

RMI activity in the public non-residential sector, like new construction, is dominated by activity in education and
health and is effectively determined by government policy.
Activity has therefore been subject to financial restrictions over the last decade. COVID-19 further impacted
supply activity and overall levels of activity fell to the lowest level since 2012 in nominal terms, including a 7%
fall in 2020. There have been increases since that time, partly driven by the Public Sector Decarbonisation
Scheme.
£m
UK: public non-residential RMI output, 2019-23
Market Indexed to 2019
4500
5000
5500
6000
6500
7000
7500
2019 2020 2021 2022 2023
Public non-residential RMI dominated by activity in education
and health
Note: data reflects Great Britain. 2023 data seasonally adjusted based on January to November figures
Source: ONS
55

The Public Sector Decarbonisation Scheme will remain a key driver in the public non-residential RMI sector in
the near-term.
However, there remains a fear that the public sector concentration on new construction will impact budgets for
RMI activity. This situation will be intensified by reductions in local authorities’ spending power with budgets
ever-tightening.
£m
at
2023
prices
UK: forecast RMI expenditure on public non-residential construction, 2023-28
7000
7250
7500
7750
8000
8250
8500
8750
2023 2024 2025 2026 2027 2028
Forecast public non-residential RMI activity
Note: data reflects Great Britain
56

Distribution of workplaces
Industry structure
The distribution of workplaces in the UK provides an indication of where potential new business opportunities
exist, particularly for the soft facilities management sector – where demand has been generated in recent
years.
The total number of active businesses has been relatively stagnant at around million.
Any increase in the number of businesses tends to reflect new start-ups and SMEs, which are typically
outside the scope of the FM sector.
UK: number of PAYE/VAT registered business establishments, (000s), by sector, 2018-23
Source: VAT statistics
57

Stability in target sector
The FM target market is broad in terms of sectors, but tends to be focused towards larger enterprises and
public sector.
Some companies have included facilities such as serviced offices in their portfolio, which is far more directed
towards the SME sector, but this service is not usually included in the definition – despite comprising many of
the services of facilities management. By focusing on the larger operators, the industrial profile of the UK
changes and there inevitably tends to be a greater level of stability.
UK: number of PAYE/VAT registered business establishments with a turnover over million, by industry
and turnover, 2023
Source: VAT statistics
58

Hybrid workspace evolution
Hybrid working practices have become established
Data from ONS’ Opinions and Lifestyle Survey (OPN) shows that the proportion of workers who split their
time between home and the workplace stood at % in May 2023, up from % in September 2022. This
suggests that hybrid working has become an established trend post-pandemic.
CIPD’s Flexible and Hybrid Working Practices in 2023 survey report, found that % of organisations have
hybrid working in place. Over half %) require hybrid working employees to be in the workplace for a
minimum number of days in the working week/month, while 46% do not. Employees are most likely to be
required in the workplace for two ( %) or three %) days a week.
The survey identified that a fifth ( %) of organisations are seeking to put in place additional measures or
investment to enable more hybrid or homeworking in the next six to 12 months.
Organisations are also looking to implement a range of measures of support – most notably making their
offices more collaborative spaces ( %), a greater investment in the quality ( %) and quantity ( %) of
technology, and more line manager training (38%).
Source: ONS Opinions and Lifestyle Survey
Gen Z's impact on the workplace
The entry of younger people into the workplace is increasingly directing workspace demand. Millennials
and Gen Zers tend to have an expectation that a workplace is less formal, more inspiring and fun, and that
it enables and encourages collaborative working.
The most recent generation to enter the workforce is Gen Z. Born between 1997 and 2012, Gen Z
currently makes up over % of the UK workforce. Individuals from Gen Z are digital natives and are
hyper-connected. Due to these traits, Gen Z has access to a wealth of knowledge on diverse working
styles, office layouts and workplace amenities. Owing to their extensive exposure to various employment
options, Gen Z is not accepting 'subpar' working environments.
According Oktra’s Future Workplace report 2023, companies need to provide ‘high-functioning
workspaces’ to attract Gen Z and Young Millennials. It revealed that the design of an office would influence
the decision of % of young office workers in accepting a job.
Even though Gen Z is the first fully digital generation, they want human elements at work. A survey by
flexible office specialist Worthere found that Gen Z is the most social of the four main age groups at work,
coming out on top when it comes to being around colleagues ( %), working in an open plan office ( %)
and working with a wide variety of senior colleagues ( %).
59

Employee costs
National Minimum Wage and National Living Wage
60

RLW rates up 10% in 2023-24
In 2023-24, the RLiW rate in London is 26.2% higher than the statutory NLW, while outside the capital it is
15.2% greater.
£
per
hour
UK: National Living Wage and real living wage, 2017-24
6
8
10
12
14
2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24
Source: Living Wage Foundation and Low Pay Commission
Growing onus on productivity improvements to absorb wage
hikes
61

Apprenticeship Levy
The Apprenticeship Levy was announced in the July 2015 budget and subsequently came into effect in the
2017/18 tax year. It is a tax on employers with an annual pay bill of more than £3 million charged at 0.5%
of the total pay bill, minus an annual levy allowance of £15,000, which means the total bill is effectively
0.5% of the pay bill over £3 million. By definition, this impacts virtually all facilities management companies
(though this often also impacts their client base).
The levy due by an employer is paid to HMRC through the pay-as-you-earn (PAYE) process alongside
payment of income tax and national insurance contributions, and is held in a 'digital fund' that the employer
can use to pay for apprenticeship training. A 10% contribution is added to each monthly payment. Funds in
the digital fund remain available for 24 months from the date of payment. Any amount that remains
unspent after that period will expire and be reclaimed by HMRC, including the 10% contribution.
Payment from the digital fund is made directly to training providers on a monthly basis for as long as the
apprentice remains on the scheme (either completes the apprenticeship or leaves the employment). Any
apprenticeship that is terminated less than 42 days after the start of the apprenticeship does not qualify for
any payment.
Workplace pensions
Workplace pensions became universal as of October 2018, introducing another cost to employment. Most
employers use pension schemes which, from April 2019, require a total minimum of 8% contribution to be
paid.
Contributions for this type of scheme include salary, wages, commission, bonuses, overtime, statutory sick
pay, statutory maternity pay, ordinary or additional statutory paternity pay, and statutory adoption pay.
UK: composition and progression of workplace pension contributions, 2012-22, (% of earnings)
62

Government policy on public sector FM
The Facilities Management Strategy
In November 2022, the government released its Facilities Management Strategy for 2022-2030. At the
heart of the strategy is the government's intention to show it understands the importance of FM and the
role that it plays in supporting public services and public policy. It is designed to establish standards to
address the quality of service which should be aspired to in the procurement of FM contracts.
Moreover, the government is seeking to establish FM as a cross-departmental policy area that requires a
cross-departmental strategy – namely one that aligns with the overall Government Property Strategy's
mission and ethos of transformation & sustainability. The strategy is hoped to encourage greater
collaboration between the public sector and FM providers.
The government set out its vision for 2030 as "the delivery of facilities management across government,
the Strategy will create an estate which: Enhances Lives, Enables Success and Ensures Value, with
accessible and responsive spaces, skilled professionals and quality services."
63

Enhancing lives, enabling success and ensuring value are the
core values of FM strategy
Enhancing lives
Enabling success
Ensuring value
Source: Facilities Management Strategy
64

WSTP introduced to evolve how the government’s office estate
is managed and operated
The Workplace Services Transformation Programme (WSTP) exists to evolve how the Government’s office
estate is managed and operated to fulfil the GPA’s mission to create great places to work for civil servants
enabling them to deliver excellent public services.
WSTP is also tackling a change in approach when procuring new services while making savings, and has
replaced national Total Facilities Management contracts with a set of disaggregated regional contracts.
These regional contracts are aimed to provide a more customer-centric, dynamic and agile delivery model.
The new approach challenges the facilities management industry to refocus their offer from maintaining
and cleaning buildings to providing safe, comfortable, and welcoming environments. FM providers will also
help deliver more efficient, sustainable and smarter buildings across the government estate.
Regional five-year facilities management contracts were awarded in September 2023.
Hard FM services, such as heating, ventilation and air conditioning maintenance, will be delivered by ISS
Mediclean in the North and Central regions, and Atalian Servest Ltd will deliver this in the South and
London regions.
Soft FM services, such as cleaning, housekeeping, hospitality and catering services, will be delivered by
Atalian Servest Ltd in the North, ISS Mediclean in the South, Mitie in the Central region and ISS Facility
Services across London.
65

COMPETITIVE LANDSCAPE
66

Industry structure
Boundaries are flexible
Diversification is a typical strategy within the sector
67

Some leading players have evolved from single service
specialism to fully fledged FM providers
Most major FM providers target both public and private sector
work
68

The official statistics indicate a major rationalisation of locations in 2020 (data covers the year to March)
following something of a rationalisation in 2019.
However, such a decline was partially offset in 2021 in a period where COVID-19 restrictions were active. The
2022 and 2023 data illustrates a continuation of the growth in the number of businesses active in the sector, but
a return to a contraction in outlets.
Another feature of companies is the multiple places where they operate, effectively reflecting the multiple outlets
of many of their clients, as well as the diversity of those clients.
UK: development of the facilities management sector, 2018-23
2018 2019 2020 2021 2022 2023
Development of the facilities management sector
Note: Data is based on SIC Code 8110: Combined facilities support activities
Source: ONS data
69

Industry structure by employment
Government statistics clearly struggle to define facilities management and include many companies that, by
definition, are too small to offer the range of services necessary to be a facilities management provider,
rather than the supplier of a single service.
It is not possible for many of the small and micro companies indicated to offer multiple services that could
correctly be defined as facilities management. Many sole traders must be expected to be sub-contracted by
the sector and almost certainly specialise in one activity.
UK: employment structure of facilities management sites, 2022-23 (number of sites and employment size
bands)
Source: ONS data
Industry structure by turnover
A further indication of the broad definition of companies in terms of size is indicated by a turnover analysis
with micro and small companies failing to have the critical mass to offer multiple services. However, the
statistics also indicate a sector where 230 companies are achieving a turnover in excess of million,
highlighting the highly competitive nature of the sector. There are also 55 companies with a turnover of
.
UK: turnover analysis of the facilities management sector, 2022-23
Source: ONS data
70

M&A activity
M&A remains an attractive strategy for FM businesses seeking growth and competitive advantage.
The cross-selling opportunities offered by many services within the facilities management sector is only
one factor that makes the sector highly acquisitive. The sector has the very attractive benefits of recurring
incomes, opportunities for public sector contracts, growing regulatory demand and the critical issue that
spending is non-discretionary for client companies. This gives it significant protection during any potential
downturn in the economy, though the size of the contracts can be impacted by reductions in client activity
levels – if, for example, the contract involves catering to a contracted workforce.
Deal volumes on the up
Deal volumes for the first half of 2023 reached a record 87 transactions, continuing an upward trajectory.
Number
of
deals
UK: facilities management M&A activity, 2019-23
2019 2020 2021 2022 2023*
0
25
50
75
100
125
150
175
Note: * H1 data only
Source: GT proprietary FM M&A tracker
71

With such a variety of services falling under the wider umbrella of facilities management, there is a continued
diversity in M&A activity by sector. This is partly driven by the opportunity for an acquirer to further diversify and
cross-sell, but there are also notable wider influences in investment related to market/technology trends and
more stringent regulation (eg the Building Safety Act 2022).
Hard FM services continue to attract both corporate and private equity investors, accounting for two-thirds of
deal volumes in the first six months.
ESG factors, the decarbonisation agenda, compliance services, and new technologies afford opportunities for
the facilities management sector. These are all expected to form a growing element of M&A activity.
%
share
of
deal
volumes
UK: facilities management M&A activity, by sector, 2022 and H1 2023
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a
t
e
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i
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g
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a
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…
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&
E
O
t
h
e
r
h
a
r
d
F
M
0
10
20
30
Hard FM services dominate M&A deals
Source: GT proprietary FM M&A tracker
72

Company profiles
Allied Universal/G4S
https://www.g4s.com/en-gb
G4S Secure Solutions (UK)
73

Financial performance
In 2022, company revenue declined by %, largely driven by significant one-off sales related to COVID-19
in the prior year.
The company's management is firmly focussed on core security activities and on achieving and maintaining
market leadership.
UK: financial analysis of G4S Secure Solutions (UK), 2018-22
Note: Year end is December
Source: G4S Secure Solutions (UK)
G4S Facilities Management (UK)
74

The significant increase in revenue in 2020 and 2021 is largely a result of contracts supporting the
government's response to COVID-19, with the company delivering facilities management and security
guarding services to COVID-19 test centres.
The decrease in turnover in 2022 was almost solely driven by the cessation of work relating to COVID-19 in
early 2022.
UK: financial analysis of G4S Facilities Management (UK), 2018-22
Source: G4S Facilities Management (UK)
CBRE GWS
https://www.cbre.com/services/transform-business-outcomes/global-workplace-solutions
75

In 2022, revenue rose by % to million. The increase in turnover but decrease in gross profit is a
result of the change in the mix of business delivered, changes in the terms of contracts with clients and
underperforming accounts.
The company seeks to achieve improvements in the cost, quality and service to customers and to strengthen
performance through the evolution of systems, standards and tools.
UK: financial analysis of CBRE GWS, 2018-22
Source:
Compass Group
https://www.compass-group.com/en/index.html
76

Compass' focus on five market sectors through a range of
brands
In addition to its specialisation in food services, the group strategically concentrates on five end-use
sectors, operating a range of brands:
• Business and industry under the Eurest, Restaurant Associates, FLIK, Bon Appétit, Canteen and ESFM
brands
• Healthcare and senior living, operating Morrison Healthcare, Morrison Living, Medirest, Unidine, and
Crothall Healthcare brands
• Education, with key brands including Chartwells, FLIK, SSC and Bon Appétit
• Sports and leisure, with the key brand Levy
• Defence, offshore and remote under the ESS brand.
Compass Group identifies strong growth opportunities
The group reported strong results in all areas in 2023. Compass Group claims that new business growth is
currently benefiting from an increase in first-time outsourcing due to additional operational complexities and
inflationary pressures.
However, the external landscape in which the Group operates continues to be challenging, with inflationary
pressures being experienced in all markets and sectors.
UK: financial analysis of CBRE GWS, 2018-22
Source: Compass Group
77

While the company does not provide a breakdown of revenue for the UK, revenue information is provided for its
total European operations.
In 2022, revenues from Europe rose by % to million, driven by strong performances in the UK,
Germany and Turkey.
Business & Industry is the largest business segment in Europe, accounting for % of regional revenue.
UK: segmentation of the European revenues of Compass Group, 2023, (%)
Business & Industry sector is largest source of revenue in
Europe
Note: Year end is September
Source: Compass Group
78

ISS Facility Services
https://www.issworld.com/en-gb
OneISS strategy
In FY 2022, turnover declined by %, reflecting the impact of contracts lost in 2021 and, to a lesser extent,
contracts lost in 2022.
During the year the company embedded the first stage of the group's OneISS strategy with a focus on
organising the operations more effectively, exiting non-core or low performing contracts, and rolling out cost
management initiatives.
UK: financial analysis of ISS Facility Services, 2018-22
Source: ISS Facility Services
79

Mitie
https://www.mitie.com/
Mitie's divisions
Following the Interserve acquisition, Mitie operates under five divisions:
1.
80

Mitie introduces new strategy in 2021
Transitioning towards higher-growth, higher-margin activities
through bolt-on acquisitions
81

Mitie launches Facilities Transformation Hub
In November 2023, Mitie unveiled its Facilities Transformation Hub at its headquarters in The Shard in
London.
The Hub showcases Mitie’s investment in cutting-edge technology to help customers embrace five key
mega-trends:
• Accelerating the path to net zero by reducing energy use and generating cleaner, greener power
• Designing commute-worthy spaces to support hybrid working and creating great places to work
• Ensuring buildings and equipment are working as efficiently and productively as possible
• Providing clean and sustainable spaces, in the context of a post-pandemic world
• Protecting people and property particularly in response to evolving threats and rising retail crime
The Hub includes a range of technology which illustrates how Mitie meeting evolving customer needs. This
includes AI which presents a multitude of opportunities for the facilities management industry.
In FY23, the company reported a 1% increase in revenue, with wins, renewals, acquisitions and inflationary
contract repricing more than offsetting contracts that were not renewed.
In the six-months to September 2023, company revenue was up 11% on the same period in 2022. According
to Mitie, its strategy of focusing on key accounts growth and projects upsell, combined with contract repricing
and infill M&A, drove revenue growth.
UK: financial analysis of Mitie, 2019-23
Source: Mitie
82

In FY23, Business Services and Technical Services were the largest business segments in terms of revenue.
'Central Government & Defence' posted the strongest increase, with revenue up 23.7% on the previous year.
Mitie sees see growth opportunities across the key areas of Central Government, Defence, Healthcare and
Education.
UK: segmentation of Mitie revenues, by sector, 2022-23
2022 2023
Business Services Technical Services Central Government &
defence
Communities Specialist Services
0
250
500
750
1000
1250
1500
1750
Segmental analysis
Note:Year end is March; includes revenue from joint ventures and associates
Source: Mitie
Serco Group
https://www.serco.com/
83

Acquisitions form an important part of Serco's strategy
Serco Group delivered resilient financial results in 2022. Revenue and underlying trading profit both grew
despite its COVID-19 Test & Trace work coming to an end.
In its latest trading update, published in December 2023, Serco has forecast profit rising in FY 2023 as
recent acquisitions have helped drive a better-than-expected performance.
It said acquisitions and demand for immigration services is helping make up for the loss of COVID-related
work.
UK: financial analysis of Serco Group, 2018-22
Source: Serco Group
84

Revenue by sector
Nearly a third %) of group revenue was generated in the Defence sector in 2022. Key services provided in
the sector include base and operational support, engineering, management and information services, space
and maritime services.
£m
UK: segmentation of Serco Group revenues, by sector, 2021-22
2021 2022
Defence Justice &
Immigration
Transport Health & Other
Facilities
Management
Citizen Services
0
250
500
750
1000
1250
1500
Source: Serco Group
85

Revenue by region
UK & Europe remains the largest region, accounting for % of group revenue in 2022.
£m
UK: segmentation of Serco Group revenues, by region, 2021-22
0
500
1000
1500
2000
2500
Source: Serco Group
86

Sodexo
https://uk.sodexo.com/home.html
Sodexo's strategy
87

In 2022, revenue was up billion. Sodexo reported some good recovery from easement of
COVID-19 restrictions for the corporate, schools, and sports and leisure businesses.
The government and healthcare business continued to perform well, supported by some temporary COVID-
related services.
UK: financial analysis of Sodexo, 2018-22
88

APPENDIX
89

Supplementary data
Size of UK government estate
million
m2
UK: UK government estates, tenure by floor area, 2022
31.3
31.3
1.6
1.6 1.7
1.7
4
4 5.6
5.6
78.7
78.7
4.6
4.6
29.1
29.1
D
e
f
e
n
c
e
C
u
l
t
u
r
a
l
A
s
s
e
t
s
C
o
u
r
t
s
a
n
d
t
r
i
b
u
n
a
l
s
R
e
m
a
i
n
i
n
g
e
s
t
a
t
e
P
r
i
s
o
n
S
c
h
o
o
l
s
O
f
f
i
c
e
s
H
e
a
l
t
h
0
25
50
75
100
Source: Government Facilities Management Strategy
90

Office floorspace in England and Wales
000
m2
UK: office floor space in England and Wales, 2001-23
77.5k
80k
82.5k
85k
87.5k
90k
92.5k
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
Note: year end is 31 March
Source: Valuation Office Agency
Recent development in NWM and NWL
UK: development of the NMW and NLW, 2017-24 (£ per hour)
Month 16-17 rate 18-20 rate 21-24 rate NLW (25+) Apprentice rate
2017 Apr 4.05 5.6 7.05 7.5 3.5
2018 Apr 4.2 5.9 7.38 7.83 3.7
2019 Apr 4.35 6.15 7.7 8.21 3.9
2020 Apr 4.55 6.45 8.2 8.72 4.15
2021 Apr 4.62 6.56 8.36 8.91* 4.3
2022 Apr 4.81 6.83 9.18 9.50* 4.81
2023 Apr 5.28 7.49 10.18 10.42* 5.28
2024 Apr 6.4 8.6 n/a 11.44** 6.4
Note: * = applies to those aged 23 years and older; ** = applies to those aged 21 and older
Source: Low Pay Commission
91

Report scope and definitions
Market definition
For the purposes of this Report, MBD has used the following definitions:
The potential facilities management market includes work contracted to third parties, including total
facilities management (TFM) contracts (also often called integrated facilities management or IFM), and the
value of projects undertaken in-house.
The market is segmented into the following sectors:
• TFM/IFM, where the full responsibility for undertaking and organising facilities management services is
contracted to a third-party company who undertakes the work or sub-contracts the work to other
companies.
• Contracted-out projects, where ancillary services are contracted out to third-party companies on an
individual contract basis. This allows the client company to retain strategic control over facilities
management and budgeting. The value for contracted-out services stated in this Report includes contracts
by single service providers and facilities management companies.
• In-house projects, where ancillary services are undertaken by in-house staff. These non-core activities
represent the remainder of the potential market for facilities management companies.
The value of the market includes manpower costs, operational management and strategic management,
including services, consultancy and training.
92

Market definiton (cont.)
The sector includes a broad range of ancillary services provided by single service contractors and facilities
management companies. These are conventionally split into soft facilities management and hard facilities
management services. The former group includes activities that support the operation of a facility, such as:
• security services
• cleaning services
• catering services
• postal services
• secretarial services.
Hard facilities management services refer to activities that support the maintenance of a facility, such as:
• gardening and landscaping
• building fabric maintenance
• lift and escalator maintenance
• lighting
• building design
• plant replacement
• construction management
• energy and environmental management.
Market definitions (cont.)
However, as the market has matured and developed, different companies are taking a broader view of the
market, which can have a few limitations. Some companies either specialise or target public service
provision, extending the market to a vast range of services, such as the provision of homes for the elderly/
care centres. Other companies have identified the prevalence of provision to enterprises, and have looked
to extend the market to smaller companies by entering the serviced office sector (typically serving new
start-ups). Many are now looking to technology to leverage a position based on information and efficiency
in an attempt to move away from the price pressures of certain parts of the industry.
Crown copyright material is reproduced with the permission of the Controller of His Majesty’s
Stationery Office and the King’s Printer for Scotland.
93

Abbreviations and Terms
List of abbreviations included:
AI Artificial Intelligence ft feet
apps Applications FY Financial Year
B2G Business-to-Government GB Great Britain
CBM Condition based maintenance GDP Gross Domestic Product
BIM Building Information Modelling GWS Global Workplace Solutions
bn billion H Half
BRC British Retail Consortium HM His Majesty's
BoE Bank of England HMP His Majesty's Prison
CG&D Central Government & Defence HVAC Heating, Ventilation and Air Conditioning
CPI Consumer Price Inflation IFM Integrated Facilities Management
CO2 Carbon dioxide IoT Internet of Things
DKK Danish Krone ISSB International Sustainability Standards Board
ESG Environmental, Social and Governance m Meter
EV Electric Vehicle M&A Merger & Acquisition
FM Facilities Management M&E Mechanical & Electrical
MBD Market & Business Development
NAO National Audit Office
NLW National Living Wage
NMW National Minimum Wage
OBR Office for Budget Responsibility
PAYE Pay-as-you-Earn
PE Private Equity
PFI Private Finance Initiative
PPE Personal Protective Equipment
R&M Repair & Maintenance
RMI Repair, Maintenance and Improvement
SDR Sustainability Disclosure Requirement
SME Small and Medium Enterprises
sq. square
TFM Total Facilities Management
UC Unitary Charge
VAT Value-Added Tax
VC Venture Capital
WSTP Workplace Services Transformation Programme
94

Methodology
B2B report methodology
Reports are researched and written by MBD’s in-house, specialist business-to-business consultants.
Research is based on an analysis of official information and original trade research, providing both a
quantitative and qualitative view of the market. MBD’s unique range of frequently updated reports provides
an integrated body of ongoing research, enabling a deep understanding of the prevailing trends and the
drivers of these trends based on trade opinion.
Meet the expert
Claudia Preedy
Senior B2B Analyst
Claudia joined Mintel in October 2013. She writes UK industrial and B2B
reports. Claudia has over nine years’ experience researching B2B
markets, identifying market trends, analysing the impact of the regulatory,
economic and political environment and providing market forecasts.
Claudia holds a Master’s degree in Marketing Management.
Read more by this expert | Get in touch
95

Disclaimer
This is marketing intelligence published by Mintel.
The consumer research exclusively commissioned
by Mintel was conducted by a UK licensed market
survey agent (see Research Methodology Europe
for more information).
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