Americas Office Fit Out Cost Guide 2024

INFLATION AND HIGH INTEREST RATES IMPACT COSTS Inflation and the increased cost of capital have driven costs higher throughout the Americas. Most countries have managed to bring inflation rates down, but notable exceptions exist.

> Canada and Mexico have also experienced a similar drop in inflation rates and increases in interest rates. Canadian 10-year bonds were 3.48% in Q4 2023, up 215 bps from pre-pandemic levels and 310 bps higher than their 2020 lows. The Bank of Canada is expected to begin cutting rates in 2024. Mexican 10-year bonds fell to 8.9% as of Q4 2023 and were 190 bps higher than pre-pandemic levels but 45 bps lower than their 2022 peak. Interest rates in Mexico are expected to decrease further by year-end 2024. > Argentina faces historically high inflation and interest rates in the triple digits. With a new government in place, there are expectations of decreasing rates for 2024.

> In the U.S., the Fed has used monetary policy over the past two years to bring inflation closer to their target. Inflation ended 2023 at 3.3%, falling from a recent peak of 8.9% in June 2022. However, historically low interest rates were raised significantly to achieve this. Ten-year treasuries were 4.5% as of Q4 2023, a 265-basis point (bps) increase from Q4 2019 and 380 bps higher than the lows of 2020. While the Fed has signaled it has likely finished increasing rates, it is uncertain when decreases will begin. In the short term, companies will need to continue operating in a high interest rate environment, which adds upward pressure to financing and construction costs.

INFLATION PUSHED PRICES HIGHER ACROSS THE AMERICAS

Off Chart +211% +119%

2023

3-Year Avg Annual

16%

14%

12%

10%

9%

9%

8%

8%

7%

7%

7%

7%

6% 6%

6%

5%

5% 5%

5%

5%

5%

4%

4%

4%

4%

3%

3%

3% 3%

2%

2%

2%

1%

0%

-2%

-2%

-4%

Source: Moody’s Analytics, Cushman & Wakefield Research

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Cushman & Wakefield