Five Cities With Surprising Office Build Out Costs

A new report from JLL reveals what companies can expect to pay, out of pocket, for an office build out across the nation.

Creating office space that attracts top talent and exceeds employees’ workplace expectations is critical in achieving a company’s business ambitions. But first, companies must face the complex task of selecting a location that not only matches their culture, but fits their budget. In order to demystify the impact a specific city has on the cost to build out an office, JLL has released its first U.S. Fit Out Guide. This report is a powerful tool that combines fit out costs and tenant improvement (TI) allowances to paint a comprehensive picture of what companies can expect to pay, out of pocket, for an office build out across the nation.

Office Build Out Costs
(Source: JLL U.S. Fit Out Guide)

“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, Americas President, JLL Project and Development Services. “By layering on market specific allowances, it gives our clients unique business intelligence to help them make impactful location decisions.”

How The Regions Stack Up

Nationally, the average cost to build out an office is $196.49 per square foot. But after taking into account the average landlord provided TI allowance of $43.61 per square foot, the out of pocket cost for tenants is $152.88 per square foot. Coming out on top as most expensive market to build out an office is Silicon Valley, California, with an out of pocket cost of $199.22. The most affordable market? Washington, DC, at $103.88.

Office Build Out Costs
(Source: JLL U.S. Fit Out Guide)

“It’s no surprise that the Northwest continues to be the most expensive region for office builds. Similarly, as we predicted, the southern cities claimed six out of the ten most affordable markets,” said Mason Mularoni, Senior Research Analyst, JLL Project and Development Services. “However, due to the range of landlord provided TI packages, some cities that made the top lists were pretty unexpected.”

Five Cities With Surprising Build Out Costs

Washington, DC: Most Affordable

Often topping most expensive lists, the District of Columbia is officially the most inexpensive market to build out an office space. As the federal government, contractors and law firms continue to consolidate, slightly below average build out costs are offset by record high concession packages from landlords that are desperate to get tenants into the growing amount of available space.

Detroit: 8th Most Expensive

Once on the brink of financial collapse, the Motor City is being reinvigorated by an eager tech community. Startups, investors and outside firms are attracted to the city’s resolve to bounce back. But Detroit isn’t in the clear just yet. In a perfect storm of above average build out costs and minimal TI packages, the city swings in as one of the top out of pocket cost markets.

Office Build Out Costs
(Source: JLL U.S. Fit Out Guide)

Los Angeles: 6th Most Affordable

What might come as a surprise to many, this California city lands at 6th least expensive market to build out an office. New leasing activity has been driven by the convergence of media, technology and entertainment, and the tech sector in particular has shown a preference for creative build outs. LA’s enormous TI packages are tied with Washington D.C. for largest in the nation, offering an affordable option in the notoriously expensive state of California.

Long Island: 3rd Most Expensive

What makes this suburb’s 3rd place spot notable is that it beats out traditional frontrunner, New York City, on the list of most expensive markets. When it comes to building costs alone, New York tops the list. But substantial TI packages in the city allows Long Island to slide ahead inout of pocket costs, holding its own among the expensive northern California cities.

Seattle: 7th Most Affordable

Although the northwest region overall tops the most expensive list, Seattle can be seen as the exception to the rule. Technology continues to be the primary driver of the city, and significant growth is occurring from both local companies, as well as tenants migrating from the Bay Area. But due to the second largest TI package average across the nation, Seattle holds down the 7th most affordable city.

The U.S. Fit Out Guide is based on nearly 2,500 JLL project budgets and over 2,100 JLL lease transactions in 51 U.S. markets. The guide shows what a tenant can expect to pay, in total, to build out a new office space. While many factors can affect the final budget, the data gives a market-by-market average of unique cost elements.

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