Americas Office Fit Out Cost Guide 2024

> Similar observations are evident in other regions. Canadian top quartile office assets also traded at a significantly higher premium of $175 psf from 2020 2023, double the average of $87 psf from 2017-2019. In LATAM, that spread is $37 psf higher in the last three years at $96 psf. > Despite leasing activity flocking to newer buildings, the office construction pipeline has continued to shrink in the U.S. Square footage under construction in the U.S. is down 45% compared to 2019, marking a 10-year low. Construction is also down in Canada, having fallen 35% since 2019. Construction has increased 43%, however, in LATAM over the same time frame. Reduced future deliveries will help foster a more competitive market environment and will benefit vacancy rates as supply decreases.

• Construction in other sectors is also declining. Despite the long-term tailwinds for industrial and multifamily, new deliveries will be lower in these sectors over the next few years due to current credit tightness and elevated cost levels. > Fit outs of older space will likely continue to compete with newer trophy buildings. • Office space renovations have more than doubled since 2019, driven by the increasing emphasis on amenities and ESG (Environmental, Social, and Governance) trends, which have compelled older assets to undergo upgrades to maintain competitiveness.

KEY TAKEAWAY

The heightened bifurcation within the office market will force older assets to undergo upgrades to remain competitive. Occupiers will have fewer new office assets to choose from over the next few years, but there will be an increase in upgraded and renovated buildings to consider. Building upgrades are focused on providing greater amenities to tenants in an effort to get people in the office.

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Cushman & Wakefield