top of page
  • Writer's pictureRealFacts Editorial Team

Here’s What It Costs To Build the Office Tenants Say They Want

Office space

Slower Growth in Renovation Costs

The landscape of office renovation is transforming, marked by fluctuating costs and evolving design trends. After a period of rapid cost increases, the pace of rising expenses for office construction and design services is beginning to cool in several key U.S. markets. This shift offers a glimmer of hope for tenants and landlords eager to resume stalled or delayed renovation plans.

Regional Cost Variations

According to a recent report by JLL, a leading property services provider and brokerage, design and construction costs are anticipated to climb about 2% this year in certain U.S. cities. Detroit, Miami, and Dallas are among the markets with the slowest growth in renovation expenses. In Detroit, the average cost of a build-out is expected to rise by 1.63% from last year to $249 per square foot. Miami follows closely with a 1.76% increase to $231 per square foot, and Dallas may see a 2.25% climb to $227 per square foot.

Most Expensive Markets

San Francisco holds the title for the highest renovation costs in the nation, with an average of $303 per square foot, followed by New York at $302 and San Jose, California, at $297. Meanwhile, Salt Lake City experienced the steepest rise in costs, with a 6.14% increase to $242 per square foot, and Las Vegas saw a 5.56% hike to $266 per square foot.

Investing in Office Refreshes

Despite the high costs in some markets, many firms are choosing to invest in office refreshes. Stephen Jay, JLL's head of design solutions, notes that as more employers mandate in-office attendance at least a few times a week, companies are rethinking their office spaces to enhance collaboration and accommodate hybrid work schedules. “There is a structural change in the way people think about work and all of us have been permanently affected,” Jay remarked.

Moderate Growth in Renovation Costs

Following two years of double-digit growth, the average cost to renovate an office with medium-quality finishes increased by just 2.7% in 2023. This year, JLL projects a more moderate rise of 2% to 4%, which they describe as a reasonable range. JLL uses the term “moderate-style” to refer to office designs that primarily feature open floor plans with small- and medium-sized workstations and a balance of 70% seating for desks and cubicles with 30% for collaborative spaces.

Key Cost Drivers

Labor, building materials, and design services are the primary cost drivers for these projects. While the average cost in Dallas, Detroit, and Miami is projected to rise at a slower pace than the national average, Charlotte, North Carolina, stands out as the only market where costs are expected to remain unchanged this year.

Insights from Industry Leaders

JLL's findings are echoed by other design firms, such as Gensler, the world’s largest architecture firm. Gensler's study revealed that only about a third of U.S. companies had redesigned their offices post-pandemic. This lag is partly due to a “wait-and-see” approach, as corporate decision-makers anticipated a clearer picture of post-pandemic work patterns. Now, with hybrid work schedules becoming the norm, executives are more confident in moving forward with design decisions.

Innovative Office Designs

One notable example of innovative office design is Nelson Worldwide’s project for the National Futures Association headquarters in Chicago. The design includes living room-style areas with sofas, bookshelves, and coffee tables, creating a homier atmosphere for employees. Similarly, architecture firm HLW incorporated phone booth-style pods in its design for Subway’s Miami headquarters, reflecting the need for private, quiet spaces within a collaborative environment.

Office Attendance Trends

As office attendance continues to climb, albeit slowly, the demand for thoughtfully designed workspaces grows. Keycard data monitored by Kastle Systems indicates that office attendance in major cities averaged 51% of pre-pandemic levels for the week ending May 15, up slightly from 50.9% the previous week. This gradual increase is driven by companies like Citigroup and other Wall Street banks, which have mandated in-office workdays to ensure better oversight and compliance.


bottom of page