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Where Is The Fit-Out Market At?

by
copywriter

A lack of labour and cost of raw materials. It’s the biggest thorn in construction’s side.

But, this week I wanted to go deeper and check how it’s affecting the fit-out market. We caught up with Fionn Byrne, Director of Myco Interiors, owned by Myco Contracts, based in London.

“We’ve been hit from all angles. Brexit, COVID, and the war. Creating long lead times and an inability to procure what’s been specified. For high-end projects, our fine stones, chairs, and wallpapers are coming from Italy and France. We finished a project six weeks ago and there are still chairs being held up in France. We have taken on this cost i.e. paying for customs and storage. And we just had to procure temporary chairs for 3-4 weeks so the venue can be used” said Byrne.

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British Gypsum have increased their prices by circa 123% over the last year. This creates a dilemma. Projects over a year old can see fit-out specialists building to the old rates with new material costs. And buying in bulk is not feasible. Firms cannot store or manage large quantities of drylining all at once.

Labour is the next big issue. The Eastern European workforce that helped so many UK firms are just not there like they used to be. “I’ve talked to many of my old colleagues. They’ve made their money. They are building their houses, and have no desire to come back to the UK. Then, this drives up rates. Before we could get good site labourers for £11/hour. Now it’s £16/hour” – states Byrne.

But, there are positives.

Hotel chains, developers, and investment funds are building deeper relationships with their fit-out partners. They want an established and trusted partner. And if fit-out firms can deliver good service, they will be rewarded with a steadier flow of projects from one single client.

“This new approach helps our business model. For example, if we do a good job for a hotel chain. And they have 30 projects over the next 4 years. We could be guaranteed to get 20 of them. And this allows us to go back to supply chain and get a more competitive service. Our clients are now much stronger partners, and we truly go into these projects together.”

With an economic downturn looming, it seems that some parts of the market will continue as usual, especially in London. Hotel chains are currently making a big commitment to their refurbishments, going full scope. Whereas before the bare minimum was applied. On top of this, cash-rich investors will see this as an opportunity to take advantage of lower property prices.

However, restaurants and other luxuries will suffer.

“Côte Brasserie has shut down 18% of their restaurants. And I can see restaurants being hit hard again because when people don’t have the same income, luxuries like eating out once per week are over.”

Volatility is ripe in this market at the moment. But, with good customer service and honest relationships, it’s evident that clients will reward fit-out firms with longer and sustainable engagements.