2024 Retail Fit Out Cost Guide

RETAIL FIT OUT COST GUIDE 2024

STATE OF THE CONSTRUCTION MARKET

SUPPLY CHAIN STRESS INDEX (2019-2023)

The construction sector faced several headwinds in 2023, including a high-interest, inflationary environment, labor shortages, and persistently extended equipment lead times. Supply chain constraints, which were prevalent early in the pandemic, have eased globally. While supply chain stress levels in the U.S. have fallen significantly from pandemic highs (-23%), they are still 22% higher than pre-pandemic levels. Current stress levels are driven in large part by labor constraints along the supply chain. Despite these challenges, construction cost increases have decelerated from pandemic highs and are currently more in line with their 10-year averages. Based on the Engineering News Record (ENR) index, construction costs, which include a common labor component, increased 2.7% year-over-year (YOY) as of December 2023 2 . This increase is significantly lower than the peak increase of 8.9% on April 2022 and below the 10-year average annual increase of 3.4%. Building cost increases, which include skilled labor, were up 3.8% YOY, less than both the 16% peak increase in April 2022 and its 4.4% 10-year annual average. The labor components of the ENR index reflect some easing in cost increases. Common labor costs are up 1.8% YOY, slightly lower than the 10-year annual average increase of 2.1%. Attracting and retaining skilled labor is more difficult, and this is reflected in the 3.3% YOY increase, which is well above the 10-year annual average of 2.3%.

United States China Latin America Global (RHS)

-1 0 1 2 3 4 5

80 90 100 110 120 130 140 150 160

Global Supply Chain Stress Index

-3 -2

Supply Chain Stress Index

2019 2020 2021

2022 2023

Source: Federal Reserve Bank of New York

BUILDING COST MONTHLY YOY CHANGES

Construction Building Common Labor Skilled Labor

10% 12% 14% 16% 18%

0% 2% 4% 6% 8%

Jul-21

Jul-22

Jul-23

Jan-21

Jul-20

Oct-21

Apr-21

Jan-22

Jan-23

Oct-22

Oct-23

Apr-22

Jan-20

Apr-23

Oct-20

Apr-20

Source: Engineering News Record (ENR) (McGraw-Hill)

2 https://www.enr.com/economics/quarterly_cost_reports

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