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What Are Comparative Costs to Build Out Office Space Today?
Construction costs rose 3% through 2017 and are expected to follow suit heading into 2018 and beyond, predicts JLL in its 2018 Office Fit Out Guide. Office leasing fundamentals are pivoting as new construction deliveries begin to outpace leasing demand, according to research by the firm, which also showed tenant improvement allowances in new and existing assets spiked, in an effort to compete for occupiers.
Set against the backdrop of rising materials costs (up 3% y-o-y) and construction labor rates (up 3.4% y-o-y), JLL’s guide helps companies better understand and adjust to a dynamic workforce and shifting office needs. This research provides a comparison and transparency of buildout costs across U.S. and Canadian markets. JLL advises it is not for cost estimating or cost of occupancy purposes.
Researchers examined 2,800 project budgets across 59 local markets and 17 industries covering more than 100 clients. The resulting matrix compared three types of space quality and complexity (base, medium and high) as well as three levels of office style from progressive, moderate and traditional. The findings included:
– Progressive Base $120.18
– Progressive Medium: $152.23
– Progressive High: $186.28
– Moderate Base: $124.98
– Moderate Medium: $158.23
– Moderate High: $193.48
– Traditional Base: $140.05
– Traditional Medium: $177.06
– Traditional High: $216.07
Top markets by % premium over U.S. average were:
1. New York City (28.5%)
2. San Francisco (22.6%)
3. Chicago (16.3%)
4. New Jersey (12.9%)
5. Boston (12.1%)
Top markets by % premium under the U.S. average were:
1. West Palm Beach (-15.9%)
2. Austin (-15.3%)
3. Miami (-15.2%)
4. Jacksonville (-15.1%)
5. Fort Lauderdale (-15%)
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