Data centre drain ramps-up M&E labour costs

The most recent London Important Contractor Survey by guide AECOM highlighted the difficulty with a rising variety of contractors trying to set up in-house MEP divisions.

The report acknowledged: “These expert trades are experiencing acute shortages. That is due partly to the fast enlargement of the info centre sector, which is absorbing a big share of the main MEP subcontractors.

“This has left different development sectors with a a lot smaller pool of high-quality subcontractors, driving up costs as a consequence of competitors will increase for restricted specialist useful resource.

“Such is the extent of the issue, among the contractors we spoke to are constructing constructed in-house MEP supply groups to make use of on their very own schemes.”

The report mentioned the issue swill intensify if the final market picks-up however short-term confidence amongst contractors within the capital is low.

Brian Smith, head of price administration and industrial, AECOM mentioned: “This 12 months’s survey reveals contractors are balancing the necessity to safe work with managing danger publicity.

“As competitors intensifies, some are ready to tackle higher danger, equivalent to committing to lengthy programme durations, to win work, whereas others are prioritising lower-risk alternatives with trusted companions.

“The problem for 2026 can be sustaining stability by strengthening the trade’s resilience and labour capability forward of what’s anticipated to be a dynamic 2027.”

Trying forward, the survey respondents have a extra assured outlook for the long run. Tier 1 contractors report wholesome order books for 2026, constructed up of a various mixture of sectors, fairly than a reliance on any single market.

Orders in London had been above the long-term common within the closing quarter of 2025, with progress throughout all sectors offsetting the 12 months’s total decline in residential exercise.

Proof factors to the London development market diversifying away from residential initiatives, shifting focus to industrial, refurbishment, public sector, life sciences, and infrastructure initiatives as a substitute.