Nationally, the average cost to build out an office is $196.49/sf. But after taking into account the average landlord-provided tenant-improvement allowance of $43.61/sf, the out-of-pocket cost for tenants is $152.88/sf, according to JLL’s new U.S. Fit Out Guide.
The report combines fitout costs and tenant improvement allowances to paint a comprehensive picture of what companies can expect to pay out of pocket for an office buildout across the nation. It also details the most- and least-expensive markets for fitouts.
Coming out on top as the most expensive market to build out an office is Silicon Valley, Calif., with an out-of-pocket cost of $199.22. The most affordable market: Washington, D.C., at $103.88.
“It’s no surprise that the Northwest continues to be the most expensive region for office builds,” says Mason Mularoni, Senior Research Analyst, JLL Project and Development Services. Southern cities claimed six out of the 10 most affordable markets.
Due to the range of landlord-provided tenant improvement packages, some cities that made the top lists were pretty unexpected.
Silicon Valley, Calif., is the most expensive market for office fitout projects, with an average out-of-pocket cost of $199.22/sf, according to JLL.
Washington, D.C.: most affordable. Often topping most-expensive lists, the District of Columbia is officially the most inexpensive market to build out an office space. As the federal government, contractors, and law firms continue to consolidate, slightly below-average buildout costs are offset by record-high concession packages from landlords who are desperate to get tenants into the exploding mass of available space.
Detroit: eighth most expensive. Once on the brink of financial collapse, the Motor City is being reinvigorated by an eager tech community. Startups, investors, and outside firms are attracted to the Motor City’s resolve to bounce back.
But Detroit isn’t in the clear just yet. Due to above-average buildout costs and minimal TI packages, the city swings in as one of the top out-of-pocket cost markets.
Los Angeles: sixth most affordable market to build out an office. New leasing activity has been nourished by the convergence of media, technology, and entertainment. The tech sector in particular has shown a preference for creative buildouts. LA’s enormous TI packages are tied with Washington, D.C., for largest in the nation, offering an affordable option in the notoriously expensive state.
Long Island, N.Y.: third most expensive, beating out traditional frontrunner New York City. When it comes to building costs alone, New York City tops the list. But substantial TI packages in the city allow Long Island to slide ahead in out-of-pocket costs, holding its own against the expensive Northern California cities.
Seattle: seventh most affordable. Although the Northwest region tops the most expensive list, Seattle is the exception to the rule. Technology continues to be the primary factor of the city, and significant growth is occurring from local companies as well as from tenants migrating from the Bay Area.
The second-largest TI package average across the nation enables Seattle to hold down seventh place in most-affordable-city honors.
Related Stories
Market Data | May 18, 2018
Construction employment rises in 38 states and D.C. from April 2017 to April 2018
California & West Virginia have biggest annual job gains, North Dakota has largest decline; California & Louisiana have largest monthly pickup, Indiana & North Dakota lead monthly drops.
High-rise Construction | May 18, 2018
The 100 tallest buildings ever conventionally demolished
The list comes from a recent CTBUH study.
Resiliency | May 17, 2018
Architects brief lawmakers and policy-makers on disaster recovery as hurricane season approaches
Urge senate passage of disaster recovery reform act; Relationship-building with local communities.
Market Data | May 17, 2018
These 25 cities have the highest urban infill development potential
The results stem from a COMMERCIALCafé study.
Market Data | May 10, 2018
Construction costs surge in April as new tariffs and other trade measures lead to significant increases in materials prices
Association officials warn that the new tariffs and resulting price spikes have the potential to undermine benefits of tax and regulatory reform, urge administration to reconsider.
Market Data | May 7, 2018
Construction employers add 17,000 jobs in April and 257,000 for the year
Unemployment rate for construction increases slightly compared to year earlier as higher pay levels appears to be attracting people with recent construction experience back into the workforce.
Market Data | May 2, 2018
Construction employment increases in 245 metro areas between March 2017 & 2018, as trade fights & infrastructure funding shortfalls loom
Houston-The Woodlands-Sugar Land, Texas and Weirton-Steubenville, W.Va.-Ohio experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines.
Market Data | May 2, 2018
Nonresidential Construction down in March, private sector falters, public sector unchanged
February’s spending estimate was revised roughly $10 billion higher.
Market Data | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
Market Data | Apr 12, 2018
Construction costs climb in March as wide range of input costs jump
Association officials urge Trump administration, congress to fund infrastructure adequately as better way to stimulate demand than tariffs that impose steep costs on contractors and project owners.
