A new report on office fit-out costs in North America sets out to establish a range of benchmarks for three different office styles, and to suggest what businesses favor which style.
JLL’s project and development services group, which produced the report, used data from more than 2,800 JLL-managed project budgets for over 100 clients from 17 industries in 59 markets throughout the U.S. and Canada.
The goal, says JLL, is to “elevate the conversation” around the real costs of building out various real estate designs. This year’s report includes office layout and space quality components to allow for evaluations of different office layouts, project complexities, and materials. It also provides high, medium, and low allowances for furniture, fixtures, and equipment (FFE); as well as for the installation of audio-visual and security equipment.
The result is an Office Fit Out Matrix, which shows how a handful of dynamics affect fit-out costs. Depending on the market and style, the costs range from $120.18 per sf to $216.07 per sf (see chart).
JLL breaks down these costs by region and metro market. The Northeast and Northwest consistently have higher fit-out costs. The medium costs in New York City are 28.5% above the U.S. average. In San Francisco, a fit-out would cost 22.6% more than the U.S. average. Conversely, the medium fit-out costs in West Palm Beach, Fla., are 15.9% below the national average; in Austin, Texas, 15.3% below.
This office fit-out matrix is based on data from over 2,800 project budgets in North America that JLL managed. Image: JLL
JLL's matrix compares the medium costs for fitting out three different office styles. Image: JLL
Three office styles examined
JLL divides its office fit-out costs along three styles:
• A Traditional office is still the most expensive to fit out. This style has the highest percentage of private office spaces, and typically between 20% and 50% fewer employees than the other two styles. Its FFE costs are the highest among the three styles, too. And tenant factors are “relatively small,” says JLL, because there is less common area. These offices are still favored by law firms, financial services companies, and businesses that focus on privacy with their offices.
JLL observes that some Traditional office styles are introducing lower-partition bench desks.
• A less-expensive fit-out, a Moderate office style features “agile” floorplans, with 10% dedicated to enclosed offices, and the rest of the space open with 6x6-foot workstations and minimal benching and guest space. Moderate offices—which are 20-25% less dense than Progressive office styles—include a healthy mix of conference rooms, and a few multipurpose and collaborative spaces. The hard fit-out costs for the Moderate style are average, but cost efficiencies can be captured by adding more bench-style desks.
• The Progressive office style is distinguished by an open floorplan, 100% of its desk space outfitted as bench-style furniture with zero enclosed spaces. This style’s focus is on activity-based working. Its employee density is 20-50% higher than a Traditional office, and it has double the amount of collaborative and conference spaces. (A standard plan would include 20 conference rooms and seven open collaborative/multi-use spaces.)
JLL points out that Progressive fit-outs generally have higher technology costs, but save money on FFE spending.
Landlords allowing for more upgrades
Last year, nearly 69 million sf of new office space were delivered to the market, but only 47.4% was preleased. JLL’s report observes that landlords are spending more to compete for tenants that are consistently gravitating toward high-quality spaces and assets. Consequently, landlords are offering better tenant improvement packages.
JLL cites several reasons for this trend, including the steady climb in construction costs, which increased on average by 15% last year. Landlords also offer better tenant improvement packages to offset the impact of higher rents.
The national average for tenant improvement allowances was $44 per sf, ranging from $105/sf in Washington D.C. to $28/sf in Nashville.
The report provides detailed snapshots of several markets, such as Austin, one of the country’s dynamic office markets, with robust growth supply. There are 3.1 million sf of new office space in Austin’s pipeline, 36% of which is preleased. The average tenant improvement allowance there last year was $45/sf.
There’s 7 million sf of new office space in the pipeline in San Francisco, where the office vacancy rate is 9.1%, and 68.8% of new space is preleased. The average tenant improvement allowance in San Francisco last year was $60/sf.
Related Stories
| Aug 11, 2010
'Too cold' and 'too hot' most common complaints among office workers, says IFMA study
The International Facility Management Association has released “Temperature Wars: Savings vs. Comfort,” a new study that takes an in-depth look at the most common thermal complaints made by workers and the variety of ways facility professionals respond to them.For many years, IFMA has surveyed facility professionals to learn the top office complaints among employees.
| Aug 11, 2010
Best AEC Firms of 2011/12
Later this year, we will launch Best AEC Firms 2012. We’re looking for firms that create truly positive workplaces for their AEC professionals and support staff. Keep an eye on this page for entry information. +
| Aug 11, 2010
Manitoba Hydro Place, Tornado Tower among world's 'best tall buildings,' according to the Council on Tall Buildings and Urban Habitat
The Council on Tall Buildings and Urban Habitat last week announced the winners of its annual “Best Tall Building” awards for 2009, recognizing one outstanding tall building from each of four geographical regions: Americas, Asia & Australia, Europe, and Middle East & Africa. This year’s winners are: Manitoba Hydro Place, Winnipeg, Canada; Linked Hybrid, Beijing, China; The Broadgate Tower, London, UK; Tornado Tower, Doha, Qatar.
| Aug 11, 2010
AAMA leads development of BIM standard for fenestration products
The American Architectural Manufacturers Association’s newly formed BIM Task Group met during the AAMA National Fall Conference to discuss the need for an BIM standard for nonresidential fenestration products.
| Aug 11, 2010
Call for entries: Building enclosure design awards
The Boston Society of Architects and the Boston chapter of the Building Enclosure Council (BEC-Boston) have announced a High Performance Building award that will assess building enclosure innovation through the demonstrated design, construction, and operation of the building enclosure.
| Aug 11, 2010
Portland Cement Association offers blast resistant design guide for reinforced concrete structures
Developed for designers and engineers, "Blast Resistant Design Guide for Reinforced Concrete Structures" provides a practical treatment of the design of cast-in-place reinforced concrete structures to resist the effects of blast loads. It explains the principles of blast-resistant design, and how to determine the kind and degree of resistance a structure needs as well as how to specify the required materials and details.
| Aug 11, 2010
Manhattan's Pier 57 to be transformed into cultural center, small business incubator, and public park as part of $210 million redevelopment plan
LOT-EK, Beyer Blinder Belle, and West 8 have been selected as the design team for Hudson River Park’s Pier 57 at 15th Street and the Hudson River as part of the development group led by New York-based real estate developer YoungWoo & Associates. The 375,000 square foot vacant, former passenger ship terminal will be transformed into a cultural center, small business incubator, and public park, including a rooftop venue for the Tribeca Film Festival.
| Aug 11, 2010
New website highlights government tax incentives for large commercial buildings
Energy Retrofit Group (ERG), the subsidiary of 40-year-old, award-winning Adache Group Architects, Inc., has announced the creation of their new energy conservation web site: www.energy-rg.com.
| Aug 11, 2010
Gensler, HOK, HDR among the nation's leading reconstruction design firms, according to BD+C's Giants 300 report
A ranking of the Top 100 Reconstruction Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants