The latest London Main Contractor Survey by consultant AECOM highlighted the issue with a growing number of contractors looking to establish in-house MEP divisions.

The report stated: “These skilled trades are experiencing acute shortages. This is due in part to the rapid expansion of the data centre sector, which is absorbing a large share of the leading MEP subcontractors.

“This has left other construction sectors with a much smaller pool of high-quality subcontractors, driving up prices due to competition increases for limited specialist resource.

“Such is the extent of the problem, some of the contractors we spoke to are building built in-house MEP delivery teams to use on their own schemes.”

The report said the problem swill intensify if the general market picks-up but short-term confidence among contractors in the capital is low.

Brian Smith, head of cost management and commercial, AECOM said: “This year’s survey shows contractors are balancing the need to secure work with managing risk exposure.

“As competition intensifies, some are prepared to take on greater risk, such as committing to long programme durations, to win work, while others are prioritising lower-risk opportunities with trusted partners.

“The challenge for 2026 will be maintaining stability by strengthening the industry’s resilience and labour capacity ahead of what is expected to be a dynamic 2027.”

Looking ahead, the survey respondents have a more confident outlook for the longer term. Tier 1 contractors report healthy order books for 2026, built up of a diverse mix of sectors, rather than a reliance on any single market.

Orders in London were above the long-term average in the final quarter of 2025, with growth across all sectors offsetting the year’s overall decline in residential activity.

Evidence points to the London construction market diversifying away from residential projects, shifting focus to commercial, refurbishment, public sector, life sciences, and infrastructure projects instead.