Sydney overtakes Tokyo as most expensive city for office fit-outs

by Sophie Berrill
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fit-out costs

Fit-out costs were high across Australia in 2022, and they’re expected to continue this way until the end of 2023, according to real estate consultancy JLL.

For the first time in half a decade, Sydney has overtaken Tokyo as the most expensive market in the Asia Pacific for office fit-outs, with the latter having held the top ranking for five consecutive years.

Several factors have impacted fit-out costs both globally and locally. Shortages of skilled resources, material price increases and supply chain disruption continue to contribute to significant price inflation across the country. Damage from weather events – such as flooding in many regions of Australia in 2022 – have further stressed construction costs. On a global scale, ongoing geopolitical tensions have exacerbated the cost of energy and constrained supply chains already under pressure.

JLL Australia’s managing director of project and development services Scott McCrossin expects these factors to continue to drive current levels of construction price inflation over the next 12 months, before starting to moderate towards the end of 2023. 

JLL’s Australia Fit-Out Cost Guide 2022/2023 compares the relative costs of fitting out ‘progressive’, ‘moderate’ and ‘traditional’ offices in major Australian cities.

Average fit-out costs

The average fit-out cost in Australia is $2,662 per square metre, a 14.84 per cent increase year-on-year. Sydney is the most expensive city for a fit-out in the country, at $2,765. Canberra ($2,761) and Adelaide ($2,703) are close behind, followed by Melbourne ($2,676), Brisbane ($2,554) and Perth ($2,522).

Average prices ranged from $1,997 per square metre for a base specification open floor plan with no enclosed offices, to $4,624 per square metre for a high specification traditional office. Builders’ labour accounts for the highest proportion (43 percent) of fit-out costs, while mechanical and electrical work remain the second largest component of costs (26 percent).

Companies continue to invest in workplaces

JLL Research anticipates that, despite the price increases, companies will continue to invest in better quality, sustainable and employee-focused workplaces.

“COVID-19 supercharged changes already underway. We have seen a rapid shift in workplace behaviours and how our clients envision their offices,” says McCrossin.

“We have seen sustained investment in technology to support the accelerated adoption of dynamic and flexible working. These developments reflect a reimagination of the role of the office as our clients invest in initiatives to drive collaboration, attract and retain talent, and enhance physical and mental health and wellbeing. Investment in high-quality space also serves to bolster environmental sustainability goals.”

See what’s inside issue two of the FM digital magazine.

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