The cost of office fit outs has been on a tear in recent years,outpacing tenant improvement allowances, according to a recentreport by JLL. It reports that the average cost of an office fitout increased by 12% last year, fueled by a combination of strongdemand for new space and increased prices for labor and materials.Tenant improvement allowances also jumped in 2018 by 13%—not byenough to fully offset cost growth, JLL said. This has resulted inan increase of net out-of-pocket costs to tenants. Of the totalconstruction cost increase in 2018, 60% was offset by increases intenant improvement allowances, and the remaining 40% was passed onto tenants.
TI allowances will keep pushing higher in 2019, JLL predicts.Concessions will continue to increase in most markets in 2019, asnew supply will remain high.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
