Still healthy demand for construction work on fit outs and office refurbishment

Although the new commercial development sector may be subdued, specialist contractors are seeing a continued demand for construction work on fit outs and office refurbishment. According to Glenigan the construction sector has been buoyed up by a series of major refurbishments of government offices while some large private sector groups are also investing to update and modernise their commercial space.

For example, Overbury and Morgan Lovell, one of the leaders in the sector and part of Morgan Sindall Group, recently reported a 13 percent increase in revenues at its fit-out division to £831 million and a record profit of £43.8 million, which was above its target range. However, the competitive nature of the sector was reflected in an unchanged margin of 5.3 percent.

The average value of Morgan Sindall Group’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.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The need to modernise central government offices is emerging as a key source of construction-related work for fit-out specialists[/perfectpullquote]

The company has 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, 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.

Significant client

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. 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.

The pipeline in the sector is also benefiting from some significant office fit out projects in the City of London. 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.