Retail fit-out costs are up 4% from last year, averaging $155 per square foot across the country, according to Cushman & Wakefield’s retail fit-out cost guide. The analysis provides cost estimates for an in-line store fit-out for 15 U.S. markets and examines current construction trends that impact costs and retail market fundamentals.
Fit-outs are costliest in Northern California, averaging $211 per square foot, followed by the Pacific Northwest at $185 per square foot and the Southwest at $173 per square foot. The Southeast was the most economical region, averaging $117 per square foot, followed by the Midwest at $127 per square foot and the Appalachian region at $128 per square foot.
The Upper Midwest had the most significant year-over-year increase, with costs rising 14% due to stronger construction activity causing competition for supplies and labor. Costs also rose significantly in Southern California, which contractors attributed to higher supplier costs, approximately half of which were passed through to clients. Chicago recorded the sharpest decline in prices, which fell by 6%.
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Mechanical accounted for the largest share of total project costs at 21%, followed by carpentry, doors and windows at 17% and general conditions at 16%. Project overhead averaged 9% of total costs across markets. Mechanical expenses increased 17% from the prior year, driven by sustained labor constraints, elevated material costs and regulatory requirements, including the phaseout of R-410A refrigerant in favor of more climate-friendly alternatives.
Recent tariff policy announcements have also resulted in increased pricing as contractors prepare for higher costs. Commodity prices remain elevated, particularly for copper, which is up 71% and aluminum, which is up 116%. Although prices are also rising on lumber and glass, they remain below their 10-year average increase.
Despite strong hiring, the construction sector continues to struggle with a constrained labor pool, said the report. Project timelines have stabilized, indicating that general contractors have become adept at managing extended schedules.
General contractors expect increased costs but stable project timelines over the next few months, with about 37% indicating material lead times had improved over the past six months, while 33% felt that they had increased slightly or significantly. Most general contractors expect both material lead times (70%) and project execution times (85%) to remain the same. Costs are expected to continue to rise, but general contractors largely said they believe their prices will remain unchanged, according to the report.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
