2024 Retail Fit Out Cost Guide

Cushman & Wakefield’s fall 2023 Construction Contractor Sentiment Survey of 14 GCs reflects some stabilization in costs. More than 50% of GCs felt that both their costs and supplier costs remained the same in the last six months. Half of GCs also felt that supplier costs increased slightly (46%) to significantly (4%), while 7% felt that their costs had decreased slightly in the last six months. Looking forward six months, 85% of GCs expect supplier costs to increase slightly (81%) to significantly (4%), but they do not expect to pass on those costs to customers. A third of GCs expect their costs to decrease slightly over the next six months.

Nonresidential building starts are down from 2022 but significantly higher than the historical average, according to the Dodge Construction Network Index. On a month-over-month (MOM) basis, nonresidential building starts were down 15% in November 2023. On a year-to-date (YTD) basis, nonresidential starts were down 5.6%, reflecting a significant slowdown in office construction. Examining starts on a rolling 12-month basis, current activity is 38% above the 20-year trend. Going forward, construction starts will likely be impacted by the current restrained lending environment.

KEY TAKEAWAY Construction costs are not rising as aggressively as they have over the past two years, but uncertainty remains. Labor, especially skilled labor, remains a challenge, but increases in commodity and materials costs have eased. High interest rates have placed additional pressure on costs, but expectations that the Fed has finished raising rates may bring some clarity and allow more companies to plan fit out projects.

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