Dive Brief:
- High labor costs, tariff impacts and competitive market conditions have caused fit-out costs to surge to $3,200 per square meter on average in North America, the highest globally, according to JLL’s 2026 global fit-out cost guide released Thursday.
- The average fit out cost per square meter rose 4.2% year over year in the region, as a mix of global macro-economic pressures affected local markets through impacts in the supply chain and labor force, particularly for mechanical, engineering, electricians and other fit-out specialist trades.
- Materials costs are of particular concern. “Copper prices have risen 26-30% year-on-year, directly inflating the cost of cabling, switchgear, transformers, and HVAC components,” JLL says in the report. “Semiconductor shortages continue to affect the pricing and availability of smart building controls, VRF air-conditioning systems, BMS equipment, and electrical switchgear. Further cost increases are likely as supply chain disruption persists and energy prices remain elevated.”
Dive Insight:
In the past 12 months, skilled worker shortages affected 55% of markets globally, particularly for mechanical and engineering specialists, electricians, and specialist fit-out trades, JLL says in the report. Raw materials also remain a significant concern, with steel and copper acting as primary forces on costs. Energy costs are also escalating to drive price increases on energy-intensive materials like plasterboard, glass and ceramics. Over that time period, U.S. trade tariffs also continue to be widely reported as a direct and indirect cost driver, particularly where supply chains route through U.S. ports or rely on U.S.-priced commodities, JLL says.
Fit-out costs vary considerably depending on scope, space requirements and the quality of finishes and specifications selected. Builders’ Works, or BW, and mechanical and engineering services are the most significant cost categories in a typical fit out, JLL says. In North America, BW accounts for 38% of total project costs while M&E contributes 29%, followed by furniture, fixtures and equipment (16%), security, IT and audio-visual (10%), and professional fees (7%).
M&E costs can also reach more than 40% or more in some markets with high sustainability specifications or where specialist equipment and labor has to be brought in, according to the report.
Fit-out costs are increasingly impacted by energy costs as well, with operational cost pressures driving demand for sustainable, energy-efficient fit-outs. Globally, 73% of occupiers reported cost reduction as their top organizational priority, with 88% of commercial real estate leaders identifying operating cost reductions through energy savings as a top C-suite priority for the next three years.
Seventy percent of markets in this year’s study reported an increase in requests for sustainable fit-outs, JLL says.
Increased energy prices are also trickling down to cause impacts on construction materials that have created “stubbornly consistent elevated construction cost inflation in most regions.”
“While it is only one part of the complex factors that influence construction and office-fit outs, it does play a significant part in cost pressures,” JLL says in the report. “As recent geopolitical events have created volatility in energy markets globally, there is growing caution around project costs in relation to this, particularly for energy-intensive fit-out materials including steel, cement, and glass.”
The most effective tools to protect budgets against further escalation and manage energy cost risk are proactive procurement timing, fixed-price commitments from contractors and early engagement with cost specialists, JLL says.
