Changing workplace dynamics are driving fit-out decisions

press release

Shorter lease commitments, talent retention and sustainability goals are driving global decision-making around office design, according to Turner & Townsend's first Global occupier fit-out report.

Turner & Townsend's Global occupier fit-out report 2023 examines the cost landscape for markets across the world, drawing together data from 42 locations and benchmarking average costs high, medium and low specification fit-outs. In addition, there is detailed functional data for 15 spotlight cities, reflecting key occupier markets.

The dataset provides corporate occupiers in sectors ranging from finance to tech, with the cost visibility to support decision-making in an increasingly complex world of work. The report identifies three key trends within the ever-evolving workplace sphere that are defining design decisions.

The first main lever is the rising take-up of short-term leases as the companies seek greater flexibility over space in a rapidly evolving market. This is combined with the increased demand for amenities as organizations look to attract workers back into the office and boost productivity.

The final driver is the growing desire for clients to accelerate their sustainability goals through their workspaces. By centralizing operations into larger HQs, some companies are on a path to meet their net-zero commitments more quickly, by consolidating into premium quality space with accreditations such as Nabers or BREEAM.

These trends sit against a backdrop of high material and labor costs in most markets, which are putting pressure on fit-out budgets across the world.

New York City is the most expensive city globally for fit-out across the three specifications, with a high specification average of US$5,398 per m2. San Francisco comes at a close second (US$5,150 per m2), with high labor prices and demand for greater amenities are driving costs higher in key North American hubs.

The European market, where Zurich, London and Edinburgh are the most expensive cities, is seeing prices continue to be impacted by supply chain disruptions due to geopolitical events, such as the war in Ukraine.

London and Paris, as leading financial and culture centers for businesses, are seeing steeper numbers as demand for higher-end specifications swell. Despite Brexit, London has maintained momentum with the leading financial institutions, who are driving much of the large-scale fit-out activity. In Paris, high-end specifications cost an average of US$3,521, driven by competition for specialist trades from other sectors such a luxury retail and hotels.

In Asia-Pacific, the concentration of global organizations in key markets including Tokyo, Sydney and Singapore is driving demand for high specification fit-out and has pushed costs up across these markets as a whole. A higher-end design in Tokyo, for example, registers at US$3,965 per m2 and price of fixed fittings and equipment being US$238.12.

“As companies look to respond to a complex landscape, it is crucial that they have access to granular data to help them execute their strategies. Given the uncertainty, capital expenditure is being directed towards where it can drive the greatest returns.

Flexible leases, hybrid working and delivering ESG commitments are defining the fit-out market as clients look to balance cost-consciousness and adaptability, with talent retention and establishing a connected culture.

Businesses want to create workspaces that support productive working and meet the demands of the current workforce. This report allows organisations to understand the interplay between their workplace strategy, commercial priorities and construction market dynamics – offering clear benchmarks that support an understanding of what key investments in the workplace will cost.”

Nadia de Klerk
Global Head of Occupier sector
Turner & Townsend