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The cost of office fit outs has been on a tear in recent years, outpacing tenant improvement allowances, according to a recent report by JLL. It reports that the average cost of an office fit out increased by 12% last year, fueled by a combination of strong demand for new space and increased prices for labor and materials. Tenant improvement allowances also jumped in 2018 by 13%—not by enough to fully offset cost growth, JLL said. This has resulted in an increase of net out-of-pocket costs to tenants. Of the total construction cost increase in 2018, 60% was offset by increases in tenant improvement allowances, and the remaining 40% was passed on to tenants.

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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.

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