Americas Office Fit Out Cost Guide 2023

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

6

Cushman & Wakefield