Fit Out Cost Guide 2025 | Retail

Labor Constraints Keep Costs Elevated

Construction employment grew 3% YOY as of March 2025, nearly double the total employment growth of 1.5% YOY. Employment in the nonresidential segment rose even higher, with 3.9% YOY growth, adding nearly 34,000 new jobs in the last 12 months. Despite this strong hiring, the construction sector continues to struggle with a constrained labor pool. Construction sector quits increased 22% YOY as of February 2025, adding pressure to an already constrained market. However, hires fell 5% YOY as the sector begins to recalibrate projects due to increased economic uncertainty. This uncertainty can also be seen impacting open positions which dropped 38% YOY. Interest rates are not falling as fast as previously expected, infusing an additional concern to developers who now must consider not only higher commodity prices, but also persistently higher interest rates when planning projects.

To attract talent to construction jobs, the sector has continued to raise incentive packages and wages. The average hourly earnings for construction employment grew 4.7% YOY to $36.79 per hour. This rate is 18% higher than private sector employment wages. Additionally, construction sector wages remain elevated relative to other complementary sectors. Median wage growth of 5.2% has decreased from 6% in November 2024 but remains higher than overall median wage growth of 4.6%. Upward pressure on wages is expected to continue in 2025, indicating that construction sector costs will face further increases this year.

Labor Constraint Remains a Concern Hiring accelerated at the beginning of 2025

800

700

600

500

400

300

200

100 0 Job Openings and Labor Turnover: Construction, (Ths. #, SA)

Jul-21

Jul-18

Jul-19

Jul-22

Jul-23

Jul-24

Jan-21

Openings May-20 Jul-20

Mar-21

Jan-18

Jan-19

Mar-18

Mar-19

Sep-21

Sep-18

Sep-19

Quits Nov-21

May-21

Jan-22

Jan-23

Jan-25

Nov-18

Jan-24

Mar-22

Mar-23

May-18

Nov-19

May-19

Mar-24

Jan-20

Mar-20

Sep-22

Sep-23

Sep-24

Nov-22

Nov-23

May-22

May-23

Sep-20

Nov-24

May-24

Nov-20

Hires

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

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Cushman & Wakefield