Americas Office Fit Out Cost Guide 2023

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OFFICE AMERICAS

FITOUT COST GUIDE 2023

INTRODUCTION

The past 12 months have once again proven to be turbulent for the office sector. Not only have receding supply chain constraints done little to abate the rising costs and material delays that continue to plague the construction sector, but inflationary pressures and increased labor costs have continued to apply upward pressure on costs. Economic uncertainty and rising interest rates are putting some planned construction projects on unsteady ground. That said, the current flight-to-quality trends will likely fuel fit outs as occupiers look to upgrade their space to attract employees in a labor market dominated by hybrid work. As it stands, most major companies have adopted some form of hybrid working model, which is helping them make strategic decisions on how to use their office space going forward. In addition, sustainability targets, more visible practices to foster and promote DE&I, and technology mean that office space fit outs go beyond how the space looks. They also consider how the space contributes to a company’s financial, social, and sustainability goals while also reflecting corporate brand and culture. This guide, which covers 45 cities and nine countries across the Americas, helps occupiers define their capital planning and relocation budgets, and includes a comprehensive fit out cost section covering: architectural trades; millwork; doors, frames and hardware; drywall, acoustic and carpentry; general finishes; mechanical, plumbing fire protection; electrical and more.

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OFFICE AMERICAS

The current flight-to-quality trends will likely fuel fit outs.

SUPPLY CHAIN CONSTRAINTS EASING, BUT STILL ELEVATED

Global supply chain stress levels have receded from their 2022 highs but remain above pre-pandemic 2019 levels. Regionally, both China and Latin America supply chain stress levels have returned to a pre-pandemic range. The U.S. experienced the steepest rise in supply chain stress, which hit a peak in September 2021. Current U.S. supply chain stress levels have fallen 22% from this 2021 peak, but remain 23% above the pre-pandemic levels of January 2020. In addition, the supplier delivery index, which measures manufacturer delays, has steadily decreased since the middle of 2021. 1 As of February 2023, supplier deliveries to manufacturers were much faster, down 50% from 2021 levels.

Despite receding stress indicators, U.S. lead times and project timelines continue to be impacted. The average lead time for switchgear—one of the most in-demand and constrained construction systems—continues to be significantly delayed, averaging 12 to 18 months. However, a recent sentiment survey of 72 general contractors (GCs), conducted by Cushman & Wakefield, points to increasing expectations that some of these challenges may be easing. For instance, 11% of respondents expect material lead times to decrease slightly in 2023. This is a significant improvement in sentiment from 2022, when none of the respondents expected a decrease. And 58% of respondents expect project execution time to remain unchanged in 2023—also an improvement from 2022 when only 25% didn’t expect a change. It should be noted that no change to project execution time also means no improvements, and that the challenged timelines of 2022 are expected to remain through 2023.

SUPPLY CHAIN STRESS INDEX (2009-2023)

United States

China

Latin America

Global (RHS)

150

140

130

120

110

100

Supply Chain Stress Index

-1

Global Supply Chain Stress Index

-2

-3

2009 2010 2011

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

2022 2023

Source: Federal Reserve Bank of New York

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OFFICE FIT OUT COST GUIDE 2023

CUSHMAN & WAKEFIELD CONSTRUCTION CONTRACTOR SENTIMENT SURVEY WINTER 2023 SOME EASING OF LEAD TIMES IS EXPECTED IN THE NEXT SIX MONTHS

Decreased Significantly Decreased Slightly No Change Increased Slightly Increased Significantly

100%

11%

13%

39%

80%

35%

46%

43%

60%

31%

40%

58%

33%

40%

20%

26%

11%

Material Lead Times Project Execution Time

Past 6 Months

Next 6 Months

Source: Cushman & Wakefield Research

KEY TAKEAWAY Global supply chain stress levels continue to recede, and manufacturer delays have eased significantly; however, U.S. lead times and project timelines continue to be impacted. According to a recent Cushman & Wakefield GC survey, there’s a higher expectation material lead times may decrease in 2023, and nearly 60% of respondents believed project execution timing will remain unchanged in 2023, as opposed to worsening or improving.

SOME COMMODITY COSTS HAVE RECEDED FROM PANDEMIC HIGHS BUT REMAIN ABOVE PRE-PANDEMIC LEVELS

Volatility in commodity costs may be slowing as prices begin leveling off. Both copper and lumber have fallen from their pandemic highs, falling 12% YoY. While costs remain elevated relative to pre-pandemic 2019, costs for copper and lumber are forecasted to flatten through 2024. Steel prices have also come down from their pandemic highs, but to a lesser degree with YoY prices up 1% and QoQ down 4%. The short-term forecast calls for steel prices to level out, albeit at an elevated level when compared to pre-pandemic prices.

Overall construction costs have been gradually receding since hitting peak levels in 2022. Building costs, which experienced the steepest rise during the pandemic, began moderating in May 2022. As of February 2023, building costs had grown 7% on a YoY basis, down from 15% a year ago. Although cost increases have decelerated, they are still elevated relative to pre-pandemic levels. Increasing interest rates have added upward pressure to costs, as well as making the lending environment more challenging. There is less clarity about how these rates will impact costs in 2023, as economic uncertainty in the first quarter has muddled the outlook on additional rate increases.

COMMODITY PRICE EASING, REMAIN ELEVATED

80%

60%

40%

20%

0% Percent Change

-20%

Lumber

Steel (Pipe and Tube)

Copper

10-Year Average Pandemic Onset (2020Q1)

YoY

Source: Moody’s Analytics

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OFFICE FIT OUT COST GUIDE 2023

COSTS ARE MODERATING BUT REMAIN ELEVATED

The labor component of construction costs has been less volatile since the onset of the pandemic, experiencing more subdued growth when compared to the steep growth in costs. However, while common labor cost increases were pretty level throughout the pandemic, skilled labor costs increased at a faster rate and experienced more volatility. Skilled labor costs have increased as contractors seek to raise wages in order to attract workers to this sector. Some optimism on pricing was evident in the recent GC sentiment survey. 62% of GCs expect a slight to significant increase in supplier prices in the next six months; however, this is a marked improvement from 2022 sentiment when 87% of respondents expected an increase. Additionally, the current survey shows improved expectations of easing prices with 29% expecting no change from current supplier prices and 8% expecting slight decreases.

MONTHLY YOY CHANGES

18%

16%

14%

12%

10%

Jul-21

Jul-22

Jan-21

Jul-20

Mar-21

Sep-21

Jan-22

Jan-23

Nov-21

May-21

Mar-22

Jan-20

Mar-23

Sep-22

Mar-20

Sep-20

Nov-22

May-22

Nov-20

May-20

Construction Building Common Labor

Skilled Labor

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

KEY TAKEAWAY Commodity cost volatility may be slowing. In 2022, prices for copper and lumber decreased and may ultimately flatten in 2024; steel prices may flatten earlier. Overall construction and building costs are decreasing, although still elevated. Skilled labor costs have increased. Cushman & Wakefield’s recent GC survey showed more than 60% expect an increase in supplier prices in the next six months, but this is down from 87% expecting increases last year.

THE FUTURE OF CONSTRUCTION LABOR IS IN FLUX

U.S. CONSTRUCTION JOB OPENINGS AND QUIT RATES

At the onset of the COVID-19 pandemic, the overall U.S. labor market was tight, with an unemployment rate of 3.5%. Initially, the pandemic-driven recession led to job losses across most employment sectors, including construction. Most of those jobs were quickly recovered as hiring accelerated. Nonresidential construction employment, however, has not recovered the jobs it lost during the pandemic. Of the over 47,000 nonresidential construction jobs lost due to the pandemic in 2020 through 2021, 37,000 were recovered as of year-end 2022, leaving a 10,000-job deficit from pre-pandemic levels. Moody’s Analytics forecasts that just over 8,000 jobs will be added in nonresidential construction in 2023, thereby leaving an overhang deficit of more than 2,000 jobs. This deficit is forecast to be exacerbated by additional job losses in 2024. This isn’t to say the jobs aren’t available. Job openings have outpaced quit rates even during the eight quarters pre-pandemic. The pandemic accelerated this trend, and the current openings to-quits rate gap was at its widest as of Q4 2022. In order to attract talent to these open positions, the sector has raised wages consistently and significantly over the last six quarters. Wages grew 14% as of Q2 2023, nearly triple the construction employment growth rate of 5%.

Gap at its widest

2017Q1

2020Q3 Quit Rates 2021Q1

2018Q1

2016Q1

2019Q1

2022Q1

2017Q3

2021Q3

2018Q3

2016Q3

2019Q3

2020Q1

2022Q3

Job Openings Rate

Source: U.S. Bureau of Labor Statistics (BLS)

NONRESIDENTIAL BUILDING CONSTRUCTION EMPLOYMENT

20 30 40 50

Jobs Lost + Jobs Gained

-50 -40 -30 -20 -10 0 10

8.1 -5.5

-7.8

-10.4

(Thousands)

Nonresidential Building Employment

2017

2018

2019

2020

2021

2022

Current Deficit

Forecast

Future Deficit

Annual Change 2023 2024

Source: U.S. Bureau of Labor Statistics (BLS)

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OFFICE FIT OUT COST GUIDE 2023

A cooling in job openings could be on the horizon as January 2023 job openings totaled 248,000, a 49% drop from the December 2022 level of 488,000. This pullback could be the result of several construction projects being put on hold due to current economic uncertainty. However, with large flows of federal funding focused on sectors which will require construction, including the CHIPS act, demand for construction labor will continue. expected to create more vacancies in the sector. Construction workers are only slightly older than the average age of U.S. employees. However, with 23% of all workers entering retirement age in the next decade, there will be additional stress on the labor pool. Additionally, in the next ten years, another 21% of employees currently aged 45-54 will also enter retirement age. To fill the labor gap, the construction sector will need to be proactive in attracting younger workers to the sector. Several initiatives to do so are underway, including the introduction of skills-based programs for young workers coupled with competitive wages. Further complicating the construction employment picture, the aging workforce is

Job openings have outpaced quit rates even during the eight quarters pre pandemic.

CONSTRUCTION WORKERS ARE SLIGHTLY OLDER THAN THE U.S. AVERAGE BUT NOT BY MUCH

AGE DISTRIBUTION OF WORKERS BY MAJOR INDUSTRIES

Median Age 48.1

Leisure and hospitality Wholesale and retail trade Information Mining, quarrying, and oil and gas extraction Professional and business services U.S. Construction Transportation and utilities Education and health services Other services Manufacturing Financial activities Public administration Agriculture, forestry, fishing, and hunting

45.6 44.6 44.3 43.3 43.2 43.0 42.4 42.3 42.3 42.1 41.7 39.6 32.7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

20 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65+

Source: U.S. Bureau of Labor Statistics (BLS)

KEY TAKEAWAY

GC sentiment on labor costs improved YoY based on our recent survey. In the 2022 survey, 16% percent of respondents expected labor costs to increase significantly, whereas in the current survey this fell to 4%. And 32% of respondents to the 2023 survey expect costs to remain at their current levels, which remain elevated when compared to long-term trends. Despite the economic uncertainty of a looming potential recession, only 1% of GCs expect labor costs to decrease in the next six months. To remain competitive, and given the labor constraints, labor will continue to be a significant contribution to persistently high costs.

Nonresidential construction employment has not recovered the jobs it lost during the pandemic, although jobs have been available. A remaining deficit of 2,000 jobs is predicted for EOY 2023. GC sentiment about labor costs improved in our survey—only 4% expect labor costs to increase significantly vs. 16% in 2022; 32% expect labor costs to stay at current levels.

IMPROVEMENT IN LABOR COST AND PROJECT EXECUTION SENTIMENT, NEXT 6 MONTHS

CUSHMAN & WAKEFIELD CONSTRUCTION CONTRACTOR SENTIMENT SURVEY, WINTER 2023

WHAT IS YOUR EXPECTATION FOR OVERALL LABOR COSTS OVER THE NEXT SIX (6) MONTHS?

Decrease Significantly Decrease Slightly No Change Increase Slightly Increase Significantly

100%

16%

80%

63%

60%

71%

40%

20%

32%

13%

2022

2023

Source: Cushman & Wakefield Research

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OFFICE FIT OUT COST GUIDE 2023

Labor will continue to be a significant contribution to persistently high costs.

FLIGHT TO QUALITY WILL DRIVE DEMAND

CLASS A SHARE OF OVERALL LEASING,4-QUARTER ROLLING TOTAL

In the evolving nature of the workplace, it has become clear that quality outperforms. At the onset of the pandemic, the share of Class A space as a percent of market leasing fell from 60% in Q1 2020 to 57% in Q2 2021. This trend began reversing in Q3 2021 as a wider return to office showed occupiers gravitating to Class A space, a reflection of employee preferences. A preference for newer, Class A space has led to stronger rent growth in this segment of the office sector, highlighting to landlords the advantages of repositioning existing assets to better compete with newer inventory. A recent survey of landlord priorities by VTS illustrates this growing shift to higher quality, highly amenitized space with 54% of landlords planning to redevelop their office asset(s) and 55% planning to add new amenities. These priorities include the implementation of a suite of hospitality-like experiences for tenants with the goal to increase occupancy by retaining current tenants and attracting new ones where possible. With these priorities set for 2023, demand for office fit outs is likely to increase as landlords focus on competing with top tier assets.

61%

60%

59%

58%

57%

56%

55%

2021 Q1

2018 Q1

2019 Q1

2021 Q2

2022 Q1

2021 Q3

2018 Q2

2018 Q3

2019 Q2

2019 Q3

2021 Q4

2018 Q4

2020 Q1

2019 Q4

2022 Q2

2022 Q3

2022 Q4

2020 Q2

2020 Q3

2020 Q4

Source: Cushman & Wakefield Research

FOR THE 10 YEARS LEADING UP TO THE PANDEMIC, 75% OF POSITIVE ABSORPTION WAS IN CLASS A ASSETS. SINCE Q2 2020, ABSORPTION HAS BEEN NEGATIVE, BUT ONLY 47% OF IT HAS BEEN CLASS A OFFICE. THE CBD TREND HAS BEEN SIMILAR.

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OFFICE FIT OUT COST GUIDE 2023

KEY TAKEAWAY

As hybrid becomes the norm across office markets, creating spaces that attract employees to the physical workspace will continue to be key to occupiers and landlords. Top tier, newer Class A space is well positioned to capture this demand for dynamic workspaces. Older office inventory will need to fit out their spaces to compete in the future of office. Approximately 60% of total space has the potential to be considered for a fit out by landlords and occupiers.

2030 TOTAL OFFICE INVENTORY BY TIER, MSF

Comparing office inventory in the U.S. by tier, at least 60% of total space has the potential to be considered for a fit out by landlords and occupiers as they aim to continue to attract workers back to the office. Of this 60%, 24% falls into a “good enough” category, which means that the space serves the office needs of an occupier. However, fit outs that increase amenities, including more communal space and space that meets health and wellness requirements of employees, will likely be needed to compete with top tier space.

15%

Top

24%

Good Enough

Value Play

15%

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Bottom

21%

25%

Total Inventory

Source: Cushman & Wakefield Research

CONSTRUCTION STARTS RECORD HISTORIC GROWTH DESPITE CHALLENGES Nonresidential building construction starts continued to show strong momentum in 2022 despite persistent cost, material and labor challenges in the industry. Full year 2022 new starts rose 38% YoY based on the Dodge Index. 2 Commercial starts, a component of nonresidential building construction, rose 25% in 2022 YoY. The components of commercial starts include office, industrial, retail and hospitality. Of these, both office—buoyed by data center and lab construction—and hospitality drove growth in 2022 while industrial and retail growth was more subdued. The North American new office construction pipeline fell for the third consecutive year, dropping 9% YoY. Despite the construction pipeline deceleration, current levels are 22% above the long-term, 20-year average. Construction in the sector has been disciplined in both Canada and the U.S. with office under construction as a percent of total inventory, falling 130 and 93 basis points, respectively, since Q1 2020.

One of the key construction storylines for 2022 was the return of enthusiasm and optimism in prospects for nonresidential growth … increased data centers, labs, and healthcare buildings will provide a solid floor for the construction sector. – Dodge Data & Analytics 3 demand for some building types like

VALUE OF NEW CONSTRUCTION STARTS: NON-RESIDENTIAL BUILDINGS, 12-MONTH TRAILING AVERAGE

$125 $150 $175 $200 $225 $250 $275 $300 $325 $350 $375 $400 $425

Billions USD, SAAR

2011

2017

2021

2012

2015

2013

2018

2016

2019

2014

2010

2022

2007

2020

2002

2005

2003

2008

2006

2009

2004

Source: Dodge Data & Analytics: New Construction Starts Report

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OFFICE FIT OUT COST GUIDE 2023

KEY TAKEAWAY

Commercial starts, a component of nonresidential building construction, rose 25% in 2022 YoY. Although new, ground-up office construction will continue to decelerate as the sector faces continued headwinds including economic uncertainty, office fit outs will likely continue to increase as landlords and occupiers look to upgrade existing space to attract labor to the office.

OFFICE: UNDER CONSTRUCTION AS % OF INVENTORY

2022 Q4, 2.9%

2022 Q4, 1.6%

2011 Q1

2017 Q1

2021 Q1

2015 Q1

2013 Q1

2019 Q1

2001 Q1

2007 Q1

2005 Q1

2003 Q1

2009 Q1

Canada

United States

Source: Cushman & Wakefield Research

AMERICAS FIT OUT COST COMPARISONS USING THE GUIDE Estimated costs provided herein are indicative of market averages based on certain assumptions. Since exact costs for specific projects may differ to those presented here, we recommend engaging a Project & Development Services professional to advise on precise costs based on your unique construction requirements.

FIT OUT COST INCREASE BY MARKET GENERATION 1, YEAR-OVER-YEAR INCREASE

30%

Off Chart +81% YoY

25%

20%

15%

10%

Orlando Peru

Cincinnati Chile

Miami

Dallas

Argentina Austin

Tampa

San Diego Portland Seattle

Philadelphia Calgary Detroit

Indianapolis St. Louis Boston

Columbus Denver

Atlanta

Guadalajara Charlotte Raleigh

Phoenix

Chicago

Houston

Panama

Toronto

San Jose

Nashville

Upstate NY Montreal

Sacramento Lower CT

Baltimore

Colombia

Vancouver

Minneapolis Monterrey

Costa Rica

Kansas City

Salt Lake City Los Angeles

Mexico City

San Francisco

New York City

Orange County

Washington DC

East Rutherford

Source: Cushman & Wakefield Project & Development Services

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OFFICE FIT OUT COST GUIDE 2023

MOST EXPENSIVE AND COST-EFFECTIVE MARKETS

Average Generation 1 (GEN 1) fit out costs in the Americas total $135 per square foot (psf), up 11% from 2022’s $122 psf average. Generation 2 (GEN 2) costs are typically priced at a 10-15% discount to GEN 1.

> The priciest markets for fit

outs are located in coastal gateway U.S. markets with San Jose being the most expensive market, where fit out costs are roughly 76% higher than the Americas average and have increased 11% YoY. The top six markets costs increased an average of 12% from the previous year, with the largest jump being New York at 14%. • San Jose: $238 psf • San Francisco: $222 psf • New York City: $213 psf • Seattle: $198 psf

• Sacramento: $184 psf • East Rutherford: $184

> The most cost-effective markets are non-dollar denominated Latin American markets and Mexico. There are five

markets with GEN 1 costs below $100 psf; none of these markets were in the U.S. or Canada. This is down from eight markets in the previous year.

• Colombia • Argentina • Peru • Mexico City • Monterrey

BREAKDOWN OF EXPENSES BY CATEGORY

18% 21%

>26% >20%

Mechanical costs account for over 20% of costs in 14 different markets, all in the U.S. Unlike the previous year, no Canadian markets had mechanical costs over this threshold.

Across all markets, electrical is the largest category of fit out costs, accounting for 21% of the total. The second highest cost category is mechanical at 18% of total.

In Denver, Nashville, Argentina, Philadelphia and Portland, electrical costs account for over 26% of total costs.

HIGH SIDE

Drywall, acoustic and carpentry— the third leading costs category— is consistently around 11%-14% of total costs, with some outliers:

Detroit 18%

Houston

Calgary 16%

16%

LOW SIDE

11-14%

Mexico City 5%

Chile 7%

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OFFICE FIT OUT COST GUIDE 2023

PDS AMERICAS FIT OUT GUIDE – PRICING CRITERIA

GENERATION 1 PROJECT DESCRIPTION The Generation 1 tenant improvement project (GEN 1) scope and related construction costs are based on modern-day corporate office space with private offices, office workstations, executive areas, reception, training rooms, conference rooms and all other associated ancillary space customary in a corporate facility. Low Voltage Cabling, Audio Visual Equipment, Security, Furniture and other Furniture, Fixtures & Equipment (FF&E) items are excluded from the pricing. Given the fluidity of the construction market, a ten percent (10%) contingency allowance has been included in the cost. GENERATION 2 PROJECT DESCRIPTION The Generation 2 tenant improvement “adaptive reuse” project (GEN 2) scope and related costs are based on all of the design criteria of the GEN 1 project with the exception of the adaptive reuse scope described as follows:

Selective demolition of the existing tenant improvements including finishes, partitions, ceilings and mechanical/electrical systems

> Reuse 25% of existing partitions and ceiling system > Reuse 25% of existing sprinkler head locations > Reuse 80% of perimeter zone air distribution > Reuse 20% of interior HVAC zone air distribution > Reuse 100% of existing electrical distribution infrastructure > Reuse 25% of existing electrical power & lighting distribution > Reuse 100% of existing fire alarm main loop with 75% new and 25% relocated devices

TENANT IMPROVEMENT COSTS FIRST & SECOND GENERATION BY MARKET

1st Generation 2nd Generation

$250

$200

$150

$100

$50

Peru

Chile

Philly

Salt Lake City Minneapolis Nashville Miami

Dallas

Austin

Tampa

Seattle

Detroit

Boston

Baltimore Denver

Vancouver Atlanta

Charlotte Raleigh

Indianapolis Houston Calgary

Panama

Phoenix

St Louis

Toronto

Orlando

Chicago

Orange Co Portland

Montreal

San Jose

Colombia

Argentina

Cincinnati

Columbus

San Diego

Monterrey

Costa Rica

Upstate NY

Kansas City

Mexico City

Guadalajara

Sacramento

Los Angeles

San Francisco

New York City

Washington DC

East Rutherford

Footnote: The project scope and criteria of this guide has been revised from the previous 2020 version in order to capture the current trend in tenant improvement design considerations. Lower Connecticut

Source: Cushman & Wakefield Project & Development Services

> In the U.S., fit out costs averaged USD$146 psf, up 12% from 2022 average costs of USD$130 psf. > Canadian costs increased 14% to CD$174 psf from 2022 costs of CD$153 psf. > Mexican fit out costs of MXN$1,724 psf were 10% higher than 2022 costs of MX$1,563 psf. > In Latin America, costs have nearly doubled in Argentina, up 81%, where the country is experiencing over 100% inflation. Chilean costs were up 17% followed by Costa Rica and Peru both up 15%. Costs were up 9% in Panama and nearly flat in Colombia, up only 2%. GEN 1 COUNTRY COSTS AND ANNUAL CHANGES (LOCAL CURRENCIES)

FIT OUT COST INCREASE BY COUNTRY GENERATION 1, YEAR-OVER-YEAR INCREASE

30%

Off Chart +81% YoY

25%

20%

17%

15%

14%

13%

10%

11%

10%

Argentina Chile Costa Rica Peru

Canada United States

Americas Mexico Panama Colombia

Source: Cushman & Wakefield Project & Development Services

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OFFICE FIT OUT COST GUIDE 2023

BEST IN CLASS OFFICE FIT OUT REQUIREMENTS

In the face of new flexible work practices, occupiers are redefining the workplace and its design to better support the effectiveness of their workforce—when they are in the office interacting socially and collaboratively; innovating; and doing focused work. Furthermore, additional sustainability and DE&I criteria are impacting fit outs as corporates strive to meet their goals. Best-in-class fit outs need to incorporate the four key influences: new workplace strategies and change management; sustainability; technology; and procurement. To achieve this, occupiers are increasingly favoring a “design and build” approach which provides a holistic, turn-key solution for their fit out. The role of the office has changed, leading to more organizations providing higher quality work areas within smaller spaces, while implementing more flexible fit outs to allow for change over time. Building amenities are also leveraged to enhance employee experience, which not only contributes to achieving sustainability and wellness targets, but also helps minimize operational expenditures. Data from Cushman & Wakefield’s proprietary workplace experience diagnostic tool, Experience per Square FootTM, has shown that, increasingly, employees consider the role of the office as a place for social connections, collaboration, and innovation. At the same time, the workplace must support time for focused work, which for many employees can be a significant chunk of their working day. As work activities and demands on the office shift, the workplace needs to be dynamic: featuring multi-functional spaces that include modular and flexible furniture to allow a variety of configurations that suit different activities; open seating that can be used by those who are in the office on any given day; and reservation systems that allow occupants to book unique shared WORKPLACE STRATEGY & CHANGE MANAGEMENT

spaces for collaboration, video calls or quiet work. These solutions recognize that hybrid or flexible work reflects a shift in how work is done, not just where it is done. Occupiers at the leading edge are making this shift through a combination of updated workplace policies, innovative office design, and thoughtful change management programs. Change management programs—the most impactful tools available to positively impact the employee’s experience in the new workplace—are designed to support employees as they approach their new way of working. Communicating about the reasons for the change and coaching people on how to use the workplace are key to the success of these programs.

SUSTAINABILITY

TECHNOLOGY

Sustainability has risen to the forefront of corporate thinking across all aspects of facility operations. Although carbon footprint varies by sector, the approach to reducing that footprint follows a similar trajectory, beginning with prioritizing energy efficiency. Occupiers are increasingly seeking out space that aligns with their corporate sustainability goals. LEED-certified buildings make up 46% of urban deliveries in the last 10 years, despite accounting for just 2.5% of U.S. inventory, further emphasizing the flight to high quality sustainable spaces. These spaces may be independently verified, meeting criteria such as LEED, WELL, Fitwel, or ENERGY STAR Tenant Space. Attributes of these spaces may include energy and water efficient technologies, appliances and fixtures, waste reduction measures, maximizing natural light, and integrating biophilia to name a few. Intelligent reservation systems and sensors can also be used to trigger closing unrequired space at times of low utilization which minimizes unnecessary power usage by HVAC and lighting systems.

Technology plays an integral role in design paradigms focusing on employee experience, productivity, wellness and environmental sustainability. As we connect the human, digital, and building experience, the proportion of budget allocated to technology has increased. Onsite demands include space booking systems and other tools to facilitate collaboration and connection. A closer focus on DE&I means creating an equality of experience no matter how, where, or when employees choose to work. An increasing proportion of Generation Z (born 1997-2012) are entering the workplace and as “digital natives,” require state of the art connectivity. Charging devices may be static (fixed power points), mobile, or a combination of the two. Technology can contribute to sustainability goals through smart systems, sensors and energy efficient appliances. A shift to cloud computing now allows for smaller server rooms, which require not only less space, but also less cooling. Similarly, asset sensors can alert facilities managers when preventative maintenance is due to help prevent system failures. Technology is not only an enabler of change, but also a way of measuring the impacts of that change, and should be budgeted according to this importance.

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PROCUREMENT

Increased supply chain stress in the post pandemic era has created a number of challenges for procurement organizations. These have included project timing delays, scarcity of products (particularly those requiring chip technology), and rising commodity and transportation costs. Challenges have changed the procurement space in many ways—but in some cases, for the better. Some organizations are: > Refocusing supply chain activities on ESG and CSR (Corporate Responsibility) goals on behalf of clients and reimagining the corporate work experience as employee teams return to the office. > Creating an emphasis on sourcing environmentally friendly materials closer to home where possible; a more efficient supply chain can assist with reducing Scope 3 emissions. > Engaging in the design process, leveraging alternate product solutions such as smart buildings, LED lighting, and water saving technology through industry-leading channel partners.

In some cases, COVID brought changes in design preferences, with a greater emphasis on hygiene and social distancing measures.

LEED-certified buildings make up 46% of U.S. urban deliveries in the last 10 years.

In almost all cases, close relationships with industry-leading suppliers can bring the latest technology and trends into the design process.

TENANT IMPROVEMENT COSTS BY SEGMENT AND MARKET

GEN 1: United States (USD)

SEGMENT COST BY MARKET

$50

$100

$150

$200

$250

San Jose San Francisco New York City Seattle Sacramento East Rutherford Orange County Portland Los Angeles Boston Chicago Lower CT Upstate NY Philadelphia San Diego Washington DC Austin Baltimore Denver Dallas Salt Lake City Minneapolis Nashville Miami Atlanta Orlando Tampa Phoenix Detroit Columbus Charlotte Raleigh Cincinnati

Arch. Millwork Contingency Doors, Frames, Hdwr Drywall, Acoustic, Carpentry Electrical General Conditions General Finishes Mechanical Mis. Architectural Trades

Kansas City Indianapolis

Houston St. Louis

Source: Cushman & Wakefield Project & Development Services

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OFFICE FIT OUT COST GUIDE 2023

SEGMENT COST COMPOSITION BY MARKET

20%

40%

60%

80%

100%

Arch. Millwork Contingency Doors, Frames, Hdwr Drywall, Acoustic, Carpentry Electrical General Conditions General Finishes Mechanical Mis. Architectural Trades

Columbus Charlotte Raleigh Cincinnati Kansas City Indianapolis

Houston St. Louis

Source: Cushman & Wakefield Project & Development Services Source: Cushman & Wakefield Project & Development Services

TENANT IMPROVEMENT COSTS BY SEGMENT AND MARKET GEN 1: Canada

SEGMENT COST BY MARKET

Canadian Dollars

$50

$100

$150

$200

Misc. Architectural Trades Arch. Millwork Doors, Frames, Hdwr Drywall, Acoustic, Carpentry General Finishes Mechanical, Plumbing, Fire Protection Electrical General Requirements, General Conditions & Fee Contingency

Toronto

Montreal

Vancouver

Calgary

SEGMENT COST COMPOSITION BY MARKET

20% 40% 60% 80% 100%

Toronto

Montreal

Vancouver

Calgary

Source: Cushman & Wakefield Project & Development Services Source: Cushman & Wakefield Project & Development Services

Cushman & Wakefield

OFFICE FIT OUT COST GUIDE 2023

TENANT IMPROVEMENT COSTS BY SEGMENT AND MARKET GEN 1: Mexico

SEGMENT COST BY MARKET

Mexican Peso

500

1,000

1,500

2,000

Guadalajara

Monterrey

Mexico City

SEGMENT COST COMPOSITION BY MARKET

20% 40% 60% 80% 100%

Guadalajara

Monterrey

Mexico City

Source: Cushman & Wakefield Project & Development Services Source: Cushman & Wakefield Project & Development Services

TENANT IMPROVEMENT COSTS BY SEGMENT AND MARKET GEN 1: Latin America

SEGMENT COST COMPOSITION BY MARKET

Local Currency

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Argentinian Peso

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Chilean Peso

50,000

100,000

150,000

200,000

250,000

300,000

Colombian Peso

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Costa Rican Colon

$20

$40

$60

$80

$100

$120

$140

$160

Panama - USD

100

150

200

250

300

Peruvian Sol

Source: Cushman & Wakefield Project & Development Services Source: Cushman & Wakefield Project & Development Services

Cushman & Wakefield

OFFICE FIT OUT COST GUIDE 2023

TENANT IMPROVEMENT COSTS BY MARKET GEN 1 (USD)

Southeast US South US Mid-Atlantic US Northeast US Midwest US West US Canada Mexico LATAM

0 25 50 75 100 125 150 175 200 225

Peru

Chile

Salt Lake City Minneapolis Nashville Miami

Dallas

Austin

Tampa

Seattle

Detroit

Boston

Baltimore Denver

Vancouver Atlanta

Charlotte Raleigh

Indianapolis Houston Calgary

Panama

Phoenix

Philadelphia Toronto

Orlando

Chicago

St. Louis

Portland

Montreal

San Jose

Colombia

Lower CT

Argentina

Cincinnati

Columbus

San Diego

Monterrey

Costa Rica

Upstate NY

Kansas City

Mexico City

Guadalajara

Sacramento

Los Angeles

San Francisco

New York City

Orange County

Washington DC

East Rutherford

Source: Cushman & Wakefield Project & Development Services Source: Cushman & Wakefield Project & Development Services

ENDNOTES

1 Institute for Supply Management (ISM)

2 Dodge Data & Analytics, New Construction Starts Report

3 https://www.construction.com/news/December-2022-Starts. Accessed March 14, 2023

LOCALMARKETDATA

ARGENTINA (LC)

ATLANTA

2022

2023

2022

2023

862.27

1,517.40

Misc. Architectural Trades

$3.62

$4.20

Misc. Architectural Trades

862.72

1,402.27

Arch. Millwork

$5.52

$7.76

Arch. Millwork

606.15

1,019.38

Doors, Frames, Hdwr

$10.81

$13.97

Doors, Frames, Hdwr

688.73

1,579.11

Drywall, Acoustic, Carpentry

$15.26

$19.11

Drywall, Acoustic, Carpentry

806.47

1,238.91

General Finishes

$6.97

$8.08

General Finishes

Mechanical, Plumbing, Fire Protection

918.07

1,245.69

$21.78

$24.63

1,425.90

3,329.33

Electrical

$22.34

$26.07

Electrical

General Requirements, General Conditions & Fee

93.47

$8.89

$10.43

626.38

1,133.21

Contingency

$9.52

$11.42

Contingency

6,890.18

12,465.30

Total

$104.71

$125.66

Total

AUSTIN

BALTIMORE

2022

2023

2022

2023

$3.00

$5.07

$2.67

$5.86

Misc. Architectural Trades

$6.95

$5.28

$6.00

$7.18

Arch. Millwork

$11.37

$9.74

$14.36

$11.64

Doors, Frames, Hdwr

$12.51

$14.40

$15.15

$17.66

Drywall, Acoustic, Carpentry

$10.75

$10.41

$7.64

$13.14

General Finishes

Mechanical, Plumbing, Fire Protection

$19.83

$29.03

$26.38

$29.06

$27.26

$37.23

$29.26

$28.10

Electrical

General Requirements, General Conditions & Fee

$13.68

$20.53

$15.71

$13.56

$10.54

$13.17

$13.18

$11.32

Contingency

$115.89

$144.86

$130.35

$137.52

Total

NOTES: LC=Local Currency All costs are GEN 1 GEN 2 costs have a 10-15% discount

Cushman & Wakefield

OFFICE FIT OUT COST GUIDE 2023

LOCALMARKETDATA

BOSTON

CALGARY (LC)

2022

2023

2022

2023

$3.36

$10.84

3.93

4.63

Misc. Architectural Trades

$8.43

$9.41

7.23

8.54

Arch. Millwork

$15.54

$16.40

14.06

16.59

Doors, Frames, Hdwr

$20.18

$17.82

18.65

22.00

Drywall, Acoustic, Carpentry

$10.48

$11.02

9.58

11.30

General Finishes

Mechanical, Plumbing, Fire Protection

$31.61

$36.34

17.55

20.71

$25.92

$26.98

22.60

26.67

Electrical

General Requirements, General Conditions & Fee

$17.13

$14.82

15.66

18.48

$13.12

$13.07

10.93

12.89

Contingency

$145.77

$156.70

120.18

141.81

Total

CHARLOTTE

CHICAGO

2022

2023

2022

2023

$3.11

$3.06

$4.33

$5.03

Misc. Architectural Trades

$4.34

$4.90

$6.82

$9.74

Arch. Millwork

$9.23

$12.81

$12.56

$10.83

Doors, Frames, Hdwr

$15.37

$17.49

$20.83

$21.11

Drywall, Acoustic, Carpentry

$7.87

$8.81

$9.58

$9.63

General Finishes

Mechanical, Plumbing, Fire Protection

$16.75

$20.92

$24.25

$35.82

$28.15

$29.39

$32.50

$35.29

Electrical

General Requirements, General Conditions & Fee

$10.45

$10.69

$13.96

$13.64

$7.67

$10.31

$12.39

$13.30

Contingency

$102.95

$118.39

$137.24

$154.39

Total

NOTES: LC=Local Currency All costs are GEN 1 GEN 2 costs have a 10-15% discount

LOCALMARKETDATA

CHILE (LC)

CINCINNATI

2022

2023

2022

2023

11,233.31

9,763.56

Misc. Architectural Trades

$2.48

$3.92

Misc. Architectural Trades

1,609.24

2,208.67

Arch. Millwork

$5.50

$5.51

Arch. Millwork

3,750.00

3,597.28

Doors, Frames, Hdwr

$11.95

$14.30

Doors, Frames, Hdwr

3,834.30

5,444.81

Drywall, Acoustic, Carpentry

$13.01

$13.83

Drywall, Acoustic, Carpentry

4,362.73

5,684.69

General Finishes

$11.33

$8.30

General Finishes

Mechanical, Plumbing, Fire Protection

7,351.05

7,911.65

$18.16

$20.80

8,642.68

10,318.11

Electrical

$18.82

$20.01

Electrical

General Requirements, General Conditions & Fee

22,061.88 32,464.89

$10.05

$21.68

6,284.52

3,143.74

Contingency

$9.13

$8.67

Contingency

69,129.70

80,537.41

Total

$100.43

$117.01

Total

COLOMBIA (LC)

COLUMBUS

2022

2023

2022

2023

40,380.37 50,696.60

$2.53

$2.54

Misc. Architectural Trades

12,783.02

15,328.82

$5.60

$3.37

Arch. Millwork

18,599.40

13,963.17

$12.17

$13.68

Doors, Frames, Hdwr

24,153.42

20,271.21

$13.25

$16.11

Drywall, Acoustic, Carpentry

38,896.89 40,849.00

$11.54

$7.09

General Finishes

Mechanical, Plumbing, Fire Protection

45,074.73 44,864.22

$18.52

$24.41

34,172.29

37,843.62

$19.21

$21.15

Electrical

General Requirements, General Conditions & Fee

36,329.28

11,149.29

$10.24

$22.06

11,996.57

32,440.43

$9.30

$8.83

Contingency

262,385.97 267,406.35

$102.35

$119.24

Total

NOTES: LC=Local Currency All costs are GEN 1 GEN 2 costs have a 10-15% discount

Cushman & Wakefield

OFFICE FIT OUT COST GUIDE 2023

LOCALMARKETDATA

COSTA RICA (LC)

DALLAS

2022

2023

2022

2023

2,302.46

2,647.83

$3.44

$6.38

Misc. Architectural Trades

3,868.24

4,448.48

$4.01

$5.12

Arch. Millwork

4,295.52

4,939.84

$9.76

$10.56

Doors, Frames, Hdwr

7,098.12

8,162.84

$14.68

$18.84

Drywall, Acoustic, Carpentry

6,165.13

7,089.90

$9.00

$8.59

General Finishes

Mechanical, Plumbing, Fire Protection

9,527.44

10,956.55

$23.24

$26.96

13,286.98

15,280.02

$30.57

$31.40

Electrical

General Requirements, General Conditions & Fee

15,815.40

18,187.71

$21.69

$15.19

4,697.31

5,401.91

$11.32

$12.93

Contingency

67,056.59

77,115.08

$127.71

$135.97

Total

DENVER

DETROIT

2022

2023

2022

2023

$3.04

$2.56

$2.79

$1.77

Misc. Architectural Trades

$5.75

$5.90

$4.98

$1.63

Arch. Millwork

$11.79

$13.95

$12.21

$10.19

Doors, Frames, Hdwr

$10.03

$14.45

$14.73

$22.52

Drywall, Acoustic, Carpentry

$11.81

$9.44

$8.44

$8.65

General Finishes

Mechanical, Plumbing, Fire Protection

$24.25

$24.84

$19.26

$22.62

$27.56

$38.17

$21.40

$30.04

Electrical

General Requirements, General Conditions & Fee

$12.66

$16.07

$10.82

$14.64

$10.69

$11.04

$9.46

$9.74

Contingency

$117.59

$136.41

$104.09

$121.80

Total

NOTES: LC=Local Currency All costs are GEN 1 GEN 2 costs have a 10-15% discount

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