Americas Office Fit Out Cost Guide 2023

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%

8%

6%

4%

2%

0%

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.

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