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AMA Research are pleased to announce the publication of the 5th Edition of the report ‘Interior Refurbishment and Fit-Out Market Report - UK 2014-2018 Analysis’. This report provides a detailed insight into this market, providing analyses of key trends in the industry, together with a review of key end-use sectors.Fit-out and refurbishment activity has bounced back in 2013 as commercial clients undertook refurbishment and repair work rather than new build projects.

Despite an upturn in the economy in 2013/early 2014, the medium-term trend in many sectors is away from capital intensive new build projects towards refurbishment and fit-out, which should provide good opportunities for contractors and material suppliers in the medium term.


Key areas covered include:

Review of the overall fit-out and interior refurbishment market – market size, trends 2008 –2013, including construction output, etc.


• Review of key end use market sectors – offices, retail, education, healthcare & leisure. Overview of trends in end-use sectors in terms of capital expenditure. Assessment of trends in demand for fit-out/interior refurbishment & future prospects for 2014-2018.


• Contractors review – review of leading contractors; trends within the supply sector. Profiles of leading players in market: shares, geographical coverage, key end-use sectors etc.


• Forecasts up to 2018 – market forecasts, key factors influencing future prospects.


Of particular interest:

• Review of key trends in fit-out & interior refurbishment – recent developments and market prospects up to 2018.


• Switch from new build to refurbishment – education, healthcare, offices, grocery sector etc.


• Review of key market sectors - development pipelines, current trends, RMI work, prospects and key drivers.


• Market structure – specialists, general contractors, regional players etc. – changes in 2012/13, framework agreements etc.


• Key client sectors - grocery multiples, hotels/leisure, London office market, healthcare (private sector, GP surgeries), education etc. - opportunities for fit-out work.


Leading contractors profiled in the report include:

Barnwood, Beck Interiors, Byrne Group, BW Interiors, Como Interiors, Ellmer, Galliford Try Interiors, Havelock Europa, ISG, Kier, MITIE, Modus Group, Morgan Sindall, Morris & Spottiswood, Overbury, Paragon Interiors, Parkeray, Simpson, Structuretone International, Styles & Wood, VINCI, Wates Interiors, Willmott Dixon Interiors.

Key areas covered in the report include:

MARKET OVERVIEW

• Market size by value 2008 -2013. Forecasts for 2014 and through to 2018.


• Key market influences e.g. office vacancy & take-up rates, consumer spending, capital investment trends, key product price trends, average wage increases by types of trade.


• Future prospects: Short term – improving prospects in the office sector, switch from new build to refurbishment, changes in grocery sector to convenience stores/growth of discounters. Medium term – balance between slowdown in education and health sectors, but recovery in private sector – timing and speed of growth?


MARKET ANALYSIS OF KEY END USE SECTORS

• Market mix by end-user sector - by contractors output values in 2013, with forecasts up to 2018. Share by sector - offices, retail, education, healthcare and leisure.


• Review of key end-use sectors & main sub-markets including:- Commercial offices (Central London, business parks, provincial cities); Retail (supermarkets/convenience stores, High Street multiples); Education (schools, universities, student accommodation); Healthcare (hospitals, primary healthcare facilities): Leisure (hotels, restaurants, pubs, betting premises, Olympic Games) etc.


• Recent trends in end-use sectors: - offices, retail, leisure, education, health, industrial etc - industry performance & underlying market drivers, trends in capital expenditure, switch from new build to refurbishment, mix changes (public / private sector), recent trends and opportunities for fit-out & interior refurbishment.


• Key clients - retail sector, office pipeline in London, hotels/leisure groups, education/healthcare funding programmes, retail developments etc. Key growth sectors in 2014/15 and up to 2018.


• Analysis of typical fit-out/interior refurbishment projects – review of key project types, costs, growth of RMI.


• Short to medium prospects within key end-use sectors & implications for fit-out & interior refurbishment contractors, development pipelines, key clients/ key sectors etc.


INTERIOR REFURBISHMENT - MARKET STRUCTURE & SUPPLY

• Review of industry structure & trends e.g. market concentration & structure, low entry levels, changes in industry structure 2011-2014, loss of some key contractors.


• Major players – estimated turnover from fit-out work, market positioning, key sectors, strength etc.


• Company profiles for leading fit-out contractors, leading shopfitters.

The Interior Refurbishment and Fit-Out market is estimated to be worth approximately £7.1bn in 2013, having risen by between 2% and 3% per annum between 2011 and 2013, following a period of significant decline.

While difficult to define, our definition of the market primarily covers main contractors which typically project manage the interior fit-out element of non-domestic new build/shell & core developments, and upgrades or refurbishment of existing non-domestic premises.

In 2013, the market was stimulated by an increasing focus on refurbishment and repair projects in the commercial sector and a noticeable increase in estate rationalisation programmes in all areas of commercial sector activity, with newbuild development remaining constrained in a number of sectors due to a lack of finance and caution amongst developers to commit to development projects.

With major reductions in capital spending programmes, this increased interest in refurbishment activity has also been seen in the public sector, with NHS trusts and universities preferring to reassess and refresh existing assets rather than building new developments, boosting refurbishment and upgrade work in health, schools and local authority accommodation.

The retail sector represents a major end use sector in terms of interior refurbishment and fit-out accounting for around a 22% share. More stable market conditions are encouraging the continuation of refurbishment and expansion plans in the grocery sector and the major supermarkets have announced significant development plans in areas such as convenience and online, though many retailers in the non-food sector have scaled back their development programmes.

Commercial offices also represent a major sector with a 27% share, and during 2013 a more sustained recovery was seen in the commercial office market, with take-up and investment returning to levels not seen since the start of the economic downturn. Much of the take-up during 2013 was for secondary space, as occupiers sought to achieve cost savings or were unable to find grade-A space in the right location. London remained the most active market in terms of total take-up, but activity has increased across many regional centres.

In terms of supply structure, the fit-out and interior refurbishment sector is highly fragmented with a smaller number of larger national contractors and many small-medium size firms operating at a regional or local level. There have been relatively few major entrants into the interior refurbishment and fit-out market in recent years, and 2013 saw some of the larger players in the sector cease trading following several years of difficult market conditions.

The outlook for the interior refurbishment and fit-out market is largely positive, with a number of major developments expected to come through in the retail sector following an improvement in consumer confidence and an increased focus on refurbishment work across all sectors. Re-branding and upgrading programmes announced by the budget hotels, value gym, cinema and grocery retail sectors will also create continued opportunities for fit-out and refurbishment contractors. We estimate that the market will see annual growth rates of around 4-5% over the next 3-4 years, to reach a value of around £8.65bn in 2018.

Table Of Contents

Interior Refurbishment and Fit-Out Market Report - UK 2014-2018 Analysis’
1. INTRODUCTION 8
1.1 BACKGROUND 8
1.2 SOURCES OF INFORMATION 8
2. SUMMARY AND FUTURE PROSPECTS 9
3. MARKET OVERVIEW 14
3.1 DEFINITION 14
3.2 MARKET SIZE AND TRENDS 14
3.2.1 Future Prospects for Interior Refurbishment and Fit-out 15
3.3 END USE MIX 16
4. COMMERCIAL OFFICES 20
4.1 OVERVIEW 20
4.2 NATIONAL OFFICE MARKET DEVELOPMENTS 20
4.2.1 Activity in 2013 and 2014 20
4.2.2 National Office Markets Outlook 22
4.3 CENTRAL LONDON OFFICE MARKET DEVELOPMENTS 23
4.3.1 Activity in 2013 and 2014 23
4.3.2 London Office Market Outlook and Development Pipeline 25
4.4 CONSTRUCTION ACTIVITY IN THE COMMERCIAL OFFICE MARKET 27
4.4.1 Commercial Office Sector RMI 29
4.4.2 Construction Costs in the Commercial Office Sector 29
4.5 PROSPECTS FOR COMMERCIAL OFFICE FIT-OUT AND INTERIOR REFURBISHMENT 31
5. RETAIL 32
5.1 RETAIL MARKET OVERVIEW 32
5.2 GROCERY RETAIL MARKET DEVELOPMENTS 33
5.2.1 Market Overview and Value 33
5.2.2 Leading Supermarket Chains 34
5.2.3 Grocery Development Pipeline 35
5.3 NON-FOOD RETAIL MARKET DEVELOPMENTS 40
5.3.1 Market Overview and Value 40
5.3.2 Leading Non-Food Retailers, Chains and Department Stores 40
5.3.3 Non-Food Sector Development Pipeline 42
5.4 CONSTRUCTION ACTIVITY IN THE RETAIL MARKET 45
5.4.1 Shopfitting Market in the UK 47
5.4.2 Construction Costs in the Retail Sector 48
5.5 PROSPECTS FOR RETAIL FIT-OUT AND REFURBISHMENT 49
6. EDUCATION 51
6.1 OVERVIEW 51
6.2 PRIMARY and SECONDARY EDUCATION ACTIVITY and INVESTMENT 51
6.2.1 Overview 51
6.2.2 Schools Spending and Investment 52
6.3 HIGHER EDUCATION ACTIVITY AND INVESTMENT 54
6.3.1 Overview 54
6.3.2 Higher Education Investment and Spending 55
6.3.3 Student Accommodation Sector 57
6.4 CONSTRUCTION ACTIVITY IN THE EDUCATION SECTOR 58
6.4.1 Outlook for Education Construction Work 60
6.4.2 School Building Programmes 60
6.4.3 Higher Education Capital Building Programmes 62
6.4.4 Education Construction Costs/Design Issues 64
6.5 PROSPECTS FOR EDUCATION FIT-OUT AND REFURBISHMENT 66
7. HEALTHCARE 68
7.1 OVERVIEW 68
7.2 PUBLIC SECTOR HEALTHCARE ACTIVITY and INVESTMENT 68
7.2.1 NHS Estate 68
7.2.2 NHS Spending and Investment 71
7.3 PRIVATE SECTOR HEALTHCARE ACTIVITY and INVESTMENT 74
7.3.1 Overview 74
7.3.2 Leading Providers of Acute Care in the Private Sector 74
7.4 CONSTRUCTION ACTIVITY IN THE HEALTHCARE SECTOR 78
7.4.1 Outlook for Healthcare Construction Work 78
7.4.2 Healthcare Sector RMI 80
7.4.3 Healthcare Construction Costs/Design Considerations 81
7.5 PROSPECTS FOR HEALTHCARE FIT-OUT AND REFURBISHMENT 82
8. LEISURE and ENTERTAINMENT 83
8.1 OVERVIEW 83
8.2 HOTEL SECTOR ACTIVITY and INVESTMENT 83
8.2.1 Structure and Size of the UK Hotel Industry 85
8.2.2 Hotel Development Pipeline 86
8.3 PUBS and RESTAURANTS ACTIVITY and INVESTMENT 89
8.4 HEALTH CLUBS ACTIVITY and INVESTMENT 92
8.5 OTHER LEISURE SECTORS 94
8.6 CONSTRUCTION ACTIVITY IN THE LEISURE SECTOR 96
8.6.1 Leisure Sector Construction Costs 97
8.7 PROSPECTS FOR LEISURE SECTOR FIT-OUT AND REFURBISHMENT 99
9. CONSTRUCTION MARKET SUPPLY 101
9.1 SUPPLY STRUCTURE 101
9.2 SECTOR SUPPLY 102
9.3 LEADING FIT OUT AND INTERIOR REFURBISHMENT CONTRACTORS 103
CHART 1 INTERIOR FIT-OUT AND REFURBISHMENT MARKET SIZE AND FORECASTS 2008 -2018 - BY OUTPUT VALUE (£M AT CURRENT PRICES) 9
TABLE 2 INTERIOR FIT OUT and INTERIOR REFURBISHMENT MARKET SIZE AND FORECASTS 2008 -2018 (£M) 15
CHART 3 UK INTERIOR FIT-OUT and REFURBISHMENT MARKET BY END USE SECTOR (OFFICES, RETAIL, EDUCATION, HEALTHCARE, LEISURE ETC) BY VALUE - 2013 16
CHART 4 UK OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) 2003 - 2013 21
CHART 5 CENTRAL LONDON OFFICE PIPELINE - CITY, WEST END, DOCKLANDS AND OTHER AREAS: 2014 - 2016 (SQ. FT. M) 26
TABLE 6 CONTRACTORS OUTPUT IN THE OFFICE SECTOR 2008-2018 (£M) 28
TABLE 7 COMMERCIAL OFFICE CONSTRUCTION COSTS - 2013 (£/ SQ. M. GIA) 30
CHART 8 UK GROCERY MARKET PERFORMANCE: MARKET VALUE 2008 - 2018 (£BN) 33
TABLE 9 UK GROCERY MARKET SIZE BY SECTOR (SUPERSTORES, CONVENIENCE STORES, DISCOUNTERS, ONLINE ETC) - £BN AND % SHARES 2013 AND 2018 34
TABLE 10 MAJOR SUPERMARKET CHAINS DEVELOPMENT PLANS (CAPEX, NEW STORE PIPELINES ETC) - SUMMARY TABLE 38
TABLE 11 MAJOR NON-FOOD CHAINS STORE EXPANSION PLANS: 2014 - 2017 43
CHART 12 SHOPPING CENTRE DEVELOPMENT PIPELINE: 2014 - 2019 (M SQ. FT.) 44
TABLE 13 RETAIL CONSTRUCTION NEW WORK: CONTRACTORS OUTPUT 2008 - 2018 (£M) 45
TABLE 14 AVERAGE RETAIL CONSTRUCTION COSTS: 2012-13 (SHOPPING CENTRE, SUPERMARKET, CONVENIENCE STORE ETC) 49
TABLE 15 DFE SPENDING 2010-2015: MIX BY RESOURCES and CAPITAL (£BN) 52
TABLE 16 SUMMARY OF 2014-15 DEVOLVED FORMULA CAPITAL (DFC) AND MAINTENANCE CAPITAL ALLOCATION (MCA) ALLOCATIONS BY TYPE OF SCHOOL (£) 53
TABLE 17 HEFCE GRANT FOR FINANCIAL YEARS 2008-09 TO 2013-14 (£M) 55
TABLE 18 HEFCE FORECASTS FOR HIGHER EDUCATION SECTOR INCOME LEVELS IN ENGLAND: 2012-2016 (£M) 56
TABLE 19 CONTRACTORS OUTPUT OF EDUCATION SECTOR WORK (PUBLIC/PRIVATE) 2008-2018 (£M) 59
TABLE 20 UNIVERSITY CAPITAL BUILDING/REFURBISHMENT PROGRAMMES 2014 64
TABLE 21 CONSTRUCTION COSTS FOR AVERAGE PRIMARY AND SECONDARY SCHOOL BY FLOOR AREA (SQ. M.) 2012-13 66
TABLE 22 TOTAL SIZE OF NHS ESTATE BY FUNCTION (SQ. M.) 2010-13 69
CHART 23 VALUE OF UK NHS EXPENDITURE 2006 - 2016 (£BN) 71
TABLE 24 NHS CAPITAL SPENDING - 2007-2016 (£BN) 72
TABLE 25 TOTAL HEALTHCARE SPENDING SCOTLAND 2010-16 (£M) 73
TABLE 26 PORTFOLIOS OF LEADING UK PRIVATE HOSPITAL PROVIDERS 2013 - NO. OF ACUTE HOSPITALS, BEDSPACES, MARKET SHARE 75
TABLE 27 PRIMARY HEALTHCARE PROVIDERS BY NUMBER OF SURGERIES OWNED/MANAGED IN 2014 77
TABLE 28 CONTRACTORS OUTPUT OF HEALTHCARE SECTOR WORK (PUBLIC/PRIVATE) 2007-2013 (£M) 78
CHART 29 HEALTH CONSTRUCTION OUTPUT FORECASTS 2008 TO 2018 - BY VALUE (£BN AT CURRENT PRICES) 79
TABLE 30 CONSTRUCTION COSTS FOR HEALTHCARE NEW BUILD and REFURBISHMENT PROJECTS - 2013 (ACUTE HOSPITAL, COMMUNITY HEALTH CENTRE ETC) 81
CHART 31 TURNOVER IN UK HOTEL SECTOR: 2008 - 2018 (£ BILLION) 84
TABLE 32 UK HOTEL SECTOR - NUMBER OF STAR RATED HOTELS 2014 85
CHART 33 GROWTH OF THE UK HOTEL SECTOR (INCLUDING THE BUDGET SECTOR): 2013- 2020 BY NO. ROOMS 88
TABLE 34 TOP UK RESTAURANT AND PUB OPERATORS - 2011 AND 2014 90
TABLE 35 LEADING HEALTH CLUB OPERATORS: FUTURE DEVELOPMENT PLANS: SUMMARY TABLE 94
TABLE 36 ENTERTAINMENT AND LEISURE WORK (PUBLIC and PRIVATE SECTORS) - CONTRACTORS OUTPUT 2008 - 2018 (£M) 96
TABLE 37 DEVELOPMENT AND CONSTRUCTION COSTS OF SPORT AND LEISURE FACILITIES - 4TH QUARTER 2013 (£/SQ. M.) 97
TABLE 38 UK HOTELS CONSTRUCTION COSTS BY TYPE OF DEVELOPMENT (BUDGET, MID-RANGE, LUXURY) £M - 2013 PRICES 98
TABLE 39 TOP SPECIALIST FIT-OUT/INTERIOR REFURBISHMENT COMPANIES BY ACTIVITY AND TURNOVER 2013-14 (£M) 104

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