JLL releases cost benchmark guide for office buildouts
- Real estate firm JLL published a cost benchmarking guide to building out three types of office space in the U.S. and Canada using data from more than 2,800 of its managed projects in 59 markets, 17 industries and representing 100 clients. Affecting rates was a 2017 construction-cost increase of approximately 3%.
- JLL looked at the fastest-growing progressive (open floor plan with no enclosed offices but plenty of conference and collaboration space), the most-popular moderate (10% enclosed offices but mostly open workspaces with conference space and two to four collaboration spaces), and traditional (40% enclosed office space and large, open floor plan workspaces). JLL then created an average cost matrix of the office styles according to whether the work to be done is basic, medium or high in quality and complexity, with average square-foot prices ranging from $120.18 to $216.07.
- Even though costs vary by geography, with New York City being the most expensive place to build out any type of space, the average cost of progressive space is $152.23 per square foot; moderate space is an average of $158.23 per square foot and traditional space is an average of $177.06 per square foot. Additionally, one major takeaway from the report is that landlords are contributing more toward buildouts in order to win tenants.
As an example of how fluid costs and allowances can be for tenant buildouts, JLL found that Silicon Valley was the most expensive place to fit out office space at $199.22 per square foot. The national average cost to build out office space was $152.88, given an average landlord allowance of $43.61 per square foot.
The New York City fit-out market is part of the city's $9 billion annual interior construction industry. However, this sector is such a potential moneymaker that it can drive some individuals and companies to commit fraud in order to benefit from it.
In February, the New York State Police and the Manhattan District Attorney's Office announced that it was investigating a potential $100 million of bid-rigging activity and other fraud in relation to interior construction projects around the city. As part of that investigation, the DA's office reportedly discovered that some former Turner Construction and Bloomberg employees allegedly overbilled Bloomberg for work at its Manhattan office by $1 million. Neither company has been implicated in any wrongdoing, and Turner officials have stated that the former employees in question intentionally went around company policies intended to prevent this sort of occurrence.
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