Office fit out costs in Asia Pacific continue to rise
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According to Cushman & Wakefield’s APAC Office Fit Out Cost Guide 2024, the average office fit out costs across Asia Pacific are still increasing in 2024, but at a significantly slower rate compared to the previous year. The report notes that while inflation has begun to ease in some markets, concerns regarding interest rates, supply chain issues, and geo-political tensions persist, although there is hope for an economic recovery in the second half of 2024.
The report also highlights that occupiers are still focusing on creating workplaces that promote productivity, wellbeing, and help achieve corporate sustainability and inclusivity goals, even as they navigate cost challenges and increased scrutiny on the quality of spend. These key considerations, categorized as the 3Cs – Cost, Carbon, and Culture — continue to shape companies’ strategies for the future of work.
Dr Dominic Brown, Cushman & Wakefield’s Head of International Research and co-author of the report, stated that the percentage rise in office fit out costs across Asia Pacific has eased significantly to 2% in both US Dollar and local currency terms, compared to 18% (local currency) and 7% (USD) a year ago. This is primarily due to the decline in raw materials costs and the easing of inflation and supply chain pressures. However, the recent shipping crisis in the Red Sea is disrupting global supply chains again and increasing freight costs, which will have an impact in due course.
North Asia and Australia/New Zealand continued to feature prominently in the 2024 APAC cost rankings, with Tokyo, Osaka, and Nagoya remaining the top three most expensive markets for a ‘Collaborative Hybrid’ style fit out, followed by Canberra (Australia) and Auckland (New Zealand).
Mitch Wilson, Cushman & Wakefield’s Head of Project & Development Services Australia & New Zealand, commented on the rankings, stating that as Sydney and Melbourne secure their positions as the 7th and 8th most expensive locations for collaborative hybrid fit outs in the Asia Pacific region, it underscores the dynamic landscape of commercial real estate across Australia.
Tom Gibson, Cushman & Wakefield’s Asia Pacific Head of Project & Development Services, emphasized that the evolving workplace landscape continues to present both challenges and opportunities to companies as they strive to maintain and enhance productivity, connectivity, and employee well-being. He noted that companies have to be smarter and more creative in their workplace and office fit out decisions, as the office now serves as a hub for social interaction, community building, and innovation.
The report also provides a global perspective on fit out costs, with London (UK) being the most expensive in EMEA at $263 per square foot (PSF), San Francisco (USA) in the Americas at $223 PSF, and Tokyo (Japan) in APAC at $199 PSF. The least expensive fit out costs are found in Gaborone (Botswana) at $50 PSF for EMEA, Ho Chi Minh City (Vietnam) at $61 PSF for APAC, and Argentina at $67 PSF for the Americas.
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