5 Cities With The Highest Office Build Out Costs In 2017

5 Cities With The Highest Office Build Out Costs In 2017

Office build out costs vary by state, region, and industry. According to the first ever US Fit Out Guide, certain cities have far higher build out costs than neighboring regions. No matter the costs, office build outs are crucial to the success of a company. A well-designed office attracts top-tier employees and more customers, but the original design and implementation must fit the budget to make the cut.

JLL recently released the first US Fit Out Guide, a report that details build out costs and tenant improvement allowances to create a comprehensive look at the costs of an office build out depending on location. The US Fit Out Guide is based on 2,500 JLL project budgets and over 2,100 JLL lease transactions across 51 U.S. markets.

“More than 85 million square feet of U.S. office space leased last year will need some level of construction. Our one-of-a-kind guide looks at build out costs, and takes it a step further by adding the tenant improvement piece of the puzzle,” said Todd Burns, President of JLL Project and Development Services in America. Burns adds the importance of the report is to help educate everyone involved in the building process to make the most effective decisions.

The average build out cost across the nation is $196.49 per square foot. The average TI allowance provided by landlords amounts to $43.61 per square foot, leaving tenants responsible for an average of $152.88 per square foot. Keep in mind, these numbers are simply averages and can fluctuate considerably based upon several factors.

Welcome to Silicon Valley in sunny California, the most expensive place to conduct an office build out when compared to all other US states. On the other end of the spectrum, the most affordable city for office build outs is Washington DC. Here, out of pocket costs average around $96 less per square foot than in Silicon Valley.

The 10 US cities with the highest build costs:

#1 most expensive: Silicon Valley

#2 most expensive: Sacramento

#3 most expensive: Long Island

#4 most expensive: San Francisco

#5 most expensive: New York

#6 most expensive: New Jersey

#7 most expensive: North San Francisco Bay

#8 most expensive: Detroit

#9 most expensive: Chicago

#10 most expensive: St. Louis

The Northwest is known as one of the most expensive regions to operate in, and in proof, California-based cities dominate the list of priciest build out costs. Of course, the list wouldn’t be complete without pricey New York. Still, San Francisco takes the lead over New York costing an average of $13 more per square footage.

Interestingly, Long Island has higher build costs than New York.  Long Island is the third most expensive city to build out an office thanks to its extensive TI packages and greater out of pocket costs.

Detroit is another unexpected city to make the list. There’s been a huge push to revamp Detroit and bring it back to its former glory as an automotive industry leader. The city suffered horribly throughout the last financial downturn but new tech companies are moving to the area with high hopes. The only problem? High build out costs could slow down progress.

The 10 US cities with the most affordable build out costs:

#1 most affordable: Washington

#2 most affordable: Houston

#3 most affordable: West Palm Beach

#4 most affordable: Hampton Roads

#5 most affordable: Atlanta

#6 most affordable: Los Angeles

#7 most affordable: Seattle

#8 most affordable: Raleigh Durham

#9 most affordable: Baltimore

#10 most affordable: Fort Worth

Southern cities dominate this list—accounting for six of the ten most affordable cities for office build outs. That’s because the south is home to more affordable labor and materials, hence lower costs.

Yet, some of the more affordable cities on the list might surprise you. Like Los Angeles, California, the sixth least expensive market for office build outs. Perhaps part of that relates to LA’s market, which is largely driven by entertainment, tech and media industries that tend to opt for more creative build outs with open formats and lower costs.

Atlanta is a flourishing city that’s home to the fifth most affordable market. Not only are labor and materials more affordable here, but also, TI allowances are nearly 25% higher than the national average, accounting for less out of pocket expenses.