08 Jun A LOOK AHEAD FOR THE FIT-OUT SECTOR IN 2017
Fit-out and refurbishment output continued to increase during the last recession, particularly in the office and retail sectors, commissioned interior refurbishment works rather than costlier new build projects. Overall, commercial offices constitute the largest market for interior refurbishment and fit-out with around 27% of projects focused on Central London, constituting the largest market. Despite renewed growth in speculative development, many estate holders remain cautious, opting to ͚stay and refurbish͛, as a shortage of affordable Grade-A space looks likely to drive up demand for high quality refurbishment. As a result, retrofit refurbishment and remodelling of existing space into Grade-A space is providing the main focus for occupiers over the short to medium term, says the report.
The outlook for fit-out and refurbishment work in the leisure sector remains mixed with significant expansion plans announced by the budget hotels, hospitality sector and budget fitness clubs, contrasting with less buoyant prospects for sectors such as the betting industry. During summer 2016 the general feeling in the fit-out market has been one of waiting for the fallout of ͚Brexit͛, effectively placing a pause on expectations. Notwithstanding this, there was an expectation that input costs (labour, plant, materials) would continue to increase after the ͚Brexit͛vote, regardless of outcome.
Whilst there is buoyancy in the market, the short-term impact of Brexit has led to price increases due to the weak pound but it͛s unknown what the effect of leaving the EU will be in the medium term. At present, industry commentators report little evidence of schemes being cancelled or put on hold, although uncertainty over the future direction of the economy may put off some investors. Unsurprisingly, London remains the most active in terms of redevelopment activity but regions outside the capital are benefiting from the heat of the London market, with developers starting to invest in areas surrounding major cities such as Cardiff, Bristol, Watford, St Albans and Oxford.