What is driving growth in the fit-out sector?

The RICS UK Construction Monitor for Q4 2025 reported that activity was broadly flat, with a number of persistent headwinds such as financial constraints, planning pressure and labour shortages all contributing to the ongoing problems in the sector.

This is the continuation of a trend that we have seen since at least 2022, when inflation and rocketing material costs put significant pressure on existing projects and blocked new starts.

However, office new build and refurbishment has recently bucked the trend, seeing 16% growth in 2025. Glenigan predicted a further 13% growth for 2026, albeit before the conflict between the United States and Iran began.

Office space utilisation has stabilised as hybrid working has become the norm. Businesses are competing to create high‑performing workplaces that genuinely entice people to commute, attract the best talent and fuel strategic revenue growth through performance.

As a result of material and labour shortages from 2022 onwards, the rate of grade A office stock being built relative to demand saw availability quickly run out.

This has meant occupiers had to look elsewhere for opportunities and has accelerated upgrades to existing but tired office stock in outdated buildings where the desired quality, performance and user experience simply couldn't be achieved.

This trend, in combination with the lack of available empty sites, has seen the refurbishment market start to outpace new builds, as seen in recent crane surveys.

We're seeing projects deliberately designed to be low carbon from day one, with smarter use of materials, better performance targets, and even circular choices like re‑using or leasing furniture, re-using raised access flooring and ceiling tiles rather than buying new.

Many clients are setting even more ambitious goals for circular reuse of building materials as well as fixtures and fittings.

Standards have shifted: the current edition of RICS' Whole life carbon assessment for the built environment (WLCA) is now the UK's reference point, and UKGBC's Net zero whole life carbon roadmap has set pretty steep reduction trajectories, so clients know exactly what good needs to look like.

There's also a real policy push. The UK government's Whole Life Carbon Management guidance for major programmes was published in March. 

Like RICS' WLCA it is aligned with PAS 2080, and it is expected that application of the guidance will filter rapidly into public sector briefs.

All of these factors are creating a baseline expectation for a carbon life cycle assessment on any meaningful project.

Clients are actively asking for these assessments, often at options stage when they're deciding whether to retain, reuse, refurbish or strip out.

They're also looking for circular procurement routes, operational energy guarantees, and the ratings and certifications – WELL, BREEAM, NABERS – to prove it.

In client feedback to AtkinsRéalis, sustainability consistently shows up as a top driver behind corporate fit-out decisions.

These innovations raise expectations and give clients the confidence needed to reinvest in their workplaces.

Turnkey design and build (D&B) routes are opening the door to more integrated innovation, with design and delivery teams collaborating earlier to test new materials, digital tools and performance‑led approaches.

We're also seeing the public sector play an important role. With government programmes focused on creating 'smaller, better, greener' estates, many organisations are taking the chance to rethink how much space they really need.

It's part of the wider shift mentioned earlier where clients want buildings that perform better, cost less to run and work for a broader range of people – inclusive design is another hot topic that is here to stay.

For AtkinsRéalis, all of this creates a real opportunity: our multi‑disciplinary model means we can bring digital, carbon, workplace and design innovation together, which clients are increasingly expecting as standard.

We have seen contractors decline tenders, even at the cost of framework penalties, rather than take on projects that exceed their risk appetite because there is enough work available to justify this action.

Unpredictable pricing in mechanical engineering and plumbing (MEP), electrical and insulation items continue to inflate project allowances.

We have seen a huge growth in requirements for cooling, audio visual (AV) and information technology (IT) to improve user experience and higher spec meeting environments are now consistent material cost drivers.

Both consultants and site operatives feel this pressure, and the anticipated pipeline will test labour availability further, particularly with rising demand for people who have the technical capabilities and knowledge to produce whole life cycle carbon assessments, support net zero delivery and meet the needs of industry standards like BREEAM, WELL and NABERS accreditations.

Will this become a barrier? Potentially, but only if clients hesitate. 

AtkinsRéalis is proactively mitigating programme pressures by advising for early contractor involvement, securing supply chain resource, two-stage routes, locking in long lead MEP and AV costs, careful sequencing in live buildings and building a culture that encourages buy in from all parties.

Cost pressures are also accelerating innovation, from exploring alternative materials and reuse strategies already discussed, to more digital coordination and smarter procurement strategies that reduce waste and shorten programmes.

There is real momentum in retrofit over new build, with landlords seeking to optimise their existing assets – especially their Grade B and lower stock – improving energy performance and enhancing workplace experience rather than committing to large‑scale redevelopments.

The expected raising of minimum energy efficiency standards (MEES) in the next five to ten years may also fuel demand.

At AtkinsRéalis, we're seeing a continued shift towards placemaking, wellbeing, inclusive design, smarter space planning and amenity‑rich offerings, while small- to medium-sized enterprises are increasingly looking for more managed, flexible environments.

Environmental, social, and governance (ESG) expectations will keep rising, with responsible material selection and low‑carbon approaches becoming routine rather than exceptional.

Labour and specialist trades will continue to be the pinch point as paused schemes re‑enter the market from 2026.

Skills shortages, increasing compliance demands – whether that be building safety, ESG data or digital reporting – and recruitment and subcontractor capacity will be the main constraint, not demand.  

We advise our clients to develop robust early packages and proactive talent planning with key trades to mitigate these issues.

It keeps us ahead of capacity issues and positions us to deliver consistently even in a tighter market.

How people think about the workplace is changing. Businesses are reacting to those changing attitudes by transforming their properties to offer spaces where employees feel comfortable and genuinely want to spend time.

These developments feed growth ambitions by increasing footfall in central areas, which further drives job creation and regeneration of towns and cities.