What’s driving the global cost dynamics in office fit-outs?

• Global economic factors and supply chain disruptions are increasingly influencing fit-out costs, though local impacts vary. While costs have stabilized in some markets, others have faced price increases, particularly those dependent on imported products affected by global trade policies.

• Labor shortages have progressively become a cost driver across all regions. Skilled trades like electricians and Mechanical & Electrical (M&E) specialists are especially affected due to increased demand from complex building systems and competition from technology-heavy sectors including data centers and manufacturing facilities.

• Corporate carbon targets and energy risks are driving demands for sustainable fit-outs and higher project specifications that can deliver value for operational efficiency and employee wellbeing.

• Technology requirements are continuing to expand, with AI adoption trends influencing construction costs and specifications. Increasing baseline complexity in building systems and overwhelming computational demands are likely to impact overall costs in 2026.

Construction costs for office fit-outs have continued to see moderate upward movement in 2025. In addition to country-specific concerns that include inflation and labor costs, global factors such as rising raw material costs (particularly for steel, copper, and aluminum), import duties, global supply chain pressures and global trade policies are influencing construction costs across all regions.

Following steep inflation increases across all markets during the global pandemic, construction cost inflation is now more mixed. In Europe, it remains elevated in the UK and Germany, while France and Spain have seen some reductions in the past 12 months. In the U.S. construction cost inflation increased quarter-on-quarter. Across Asia-Pacific, Australia and Singapore have seen sustained increases, due in part to labor shortages and import costs. Currency exchange rates and fluctuations also impacted costs and import duties in countries with high dependencies on imports such as New Zealand or the Philippines.

Within this increasingly complex environment of cost pressures and fluctuation, we assess the key cost impacts and drivers for office fit-out projects in 2025 and how that will play out over the coming months, through market sentiment analysis, a review of JLL Fit-Out Cost Benchmarks and external data sources.

This research is based on JLL's cost benchmark research for offices, for more information see our Global Office Fit-Out Cost Benchmarks 2025 or contact the research authors for more information. 

The most common cost driver reported globally was U.S. trade policies and tariffs, reported by 62% of markets assessed, primarily across the U.S. and Asia Pacific. Prices for construction materials and products have increased in the U.S. and some countries in Asia Pacific, but other markets have seen prices of some products fall as goods previously destined for the US are creating a surplus in some markets and causing prices to fall. These are mostly related to immediate market reactions to policy uncertainty, although the complete pass-through effects on actual material and equipment prices have yet to fully materialize.

The second most common cost driver reported was labor shortages, emerging as a global trend, with shortages for both skilled and unskilled/manual workers hitting costs in 38%-53% of markets assessed. Construction workforce requirements are influenced by country-level construction activity - associated skills demand, local availability and talent pipelines. Skilled labor shortages are now evident as the greatest challenge in many markets, with an acute issue reported by 28% of markets assessed.

Finally, raw material cost was the third most common cost driver reported, affecting both materials and component products, with 48% of markets reporting issues. Global steel prices continued to have a significant impact on construction costs. While commodity prices have also stabilized since peaks in 2021-22, costs for steel have remained elevated, with steel price indexes showing costs are highest in the U.S.

The impact of these global factors have varied at a local level, therefore understanding global-to-local economic effects is increasingly important for individual project delivery and long-term capital planning for office fit-outs across global portfolios. 

Cost drivers can have variable impacts on different components of fit-out projects. JLL’s Global Fit-Out Cost Guide assesses costs across cost profile categories (e.g. Builders Works, Technology, etc) to understand how these have differed across specific materials, labor requirements and supply chain factors in 2025. Since Q1 2025, most markets have reported minor increases in costs across the four categories assessed.

Builder works—such as materials, partitions and flooring—have generally seen minor or no cost increases in most regions. Although material prices remain influenced by raw input costs, trade and regulatory policy, and construction costs in many areas have generally stabilized following several years of rapid inflation.

Mechanical & Electrical (M&E) equipment has experienced some of the most pronounced cost increases due to higher prices for specialized equipment and installation, shortages in Heating, Ventilation and Air Conditioning (HVAC) equipment and technology, and rising raw material costs for steel and other metals.

Costs for Technology & Smart Building Systems vary by region, with EMEA countries seeing escalating costs due to strong demand, supply chain challenges, ongoing global chip shortages and high product prices. In contrast, many APAC projects are benefiting from their proximity to technology manufacturing hubs, which is resulting in shorter supply delays and lower import duties.

Furniture, Fixtures & Equipment (FFE) costs are estimated to have increased between 1.8-3.0% across regions, with supplier prices influenced by raw material costs and import duties.

The impact of these combined factors on office-fit-out projects can range considerably, depending on the project location and design requirements. Engaging project teams and suppliers early in planning and design stages provides opportunities for early assessment of risks, and identification areas for cost optimizations.

In addition to rising labor costs, shortages of both skilled and unskilled workforces were reported across over half of markets assessed, especially in specialized trades such as electricians, carpenters, joiners, HVAC technicians and project managers. The severity differs by region, with Central/Western Europe facing the most acute pressures. Countries in Asia-Pacific are impacted by aging populations and construction projects for major events (such as the 2032 Olympics in Australia) and North America is experiencing challenges from domestic immigration policies. In many regions these shortages have led to increased wage premiums and risks of project delays, meaning that capital project planning in 2026 will have greater focus on labor availability and local talent pipelines.

In particular, technical skills for advanced building systems and technology installation have been in higher demand for higher-specification office fit-outs that meet sustainability and complex technology requirements. Moreover, these specialist skills are in increasing demand for the construction of industrial buildings such as high-value manufacturing facilities and data centers. It is increasingly apparent the future construction workforce will require greater investment in these skills, both technological and ‘green’. 

With increasing cost pressures, fit-out design and delivery must create holistic value from investments. JLL Research shows that the top CRE priorities for corporate occupiers in 2025 were cost reduction, efficiency and operational performance, followed closely by sustainability and employee experience (JLL Research, Global Occupier Survey 2025). This research also indicated that energy performance was the leading driver of sustainability for their portfolios, across 62% of corporate organizations. This underscores the importance of sustainable fit-outs within a portfolio strategy focused on low operational costs. Ultimately, investing in sustainable fit-outs—especially those targeting energy performance and employee experience—has become a critical long-term value driver.

Sustainable fit-outs designed to reduce operational costs, improve employee wellbeing and support corporate carbon targets are driving increasing demand across most regions, with 71% of markets reporting demand for sustainable fit-outs, up from 60% in Q1 2025. This trend is especially pronounced in EMEA and APAC, where sustainability is a top priority for many occupiers given their organizational commitments, local policies and employee expectations.

Corporate mandates and sustainability requirements were the primary drivers of sustainable design, highlighting that corporate occupiers are leading the shift towards low-carbon designs globally. In particular, building certifications—often essential for implementing corporate sustainability strategies at both the project and portfolio level—are pushing the adoption of higher standards for M&E systems, as well as HVAC systems that promote better indoor air quality, improved energy efficiency and the use of low-emission materials. Proactive early engagement with supply chains and specialist contractors is critical for more complex projects timeframes and deliverables and ensure that investments deliver corporate objectives for sustainable buildings that support both operational efficiency and employee wellbeing.

JLL’s recent Global Technology Survey highlights that corporate real estate is entering a stage of technology transformation, with AI and advanced technology solutions now being integral to many real estate functions. This is inevitably changing technology specifications for office fit-outs too, with 63% of markets reporting an increase in technology requirements for fit-out projects. Specifically, there is rising demand for advanced building management systems (BMS), environmental sensors, predictive occupancy management and remote energy monitoring. These solutions optimize operations, improve sustainability metrics and support flexible working environments, and will continue to evolve as AI advances these solutions and the underlying building infrastructure needed. 

Recent years have seen a growth in demand for high-spec video conferencing, immersive AV (audio-visual) setups, and collaboration spaces equipped with the latest digital tools, a trend that is strongest in technology-forward markets (e.g., India, Australia, the UK, North America, Singapore) and in projects for multinational clients. While not mainstream, increasing numbers of projects are piloting advanced technology, such as VR-enabled rooms for training or collaboration, augmented reality (AR) in work settings, and digital-twin modeling for building optimization.

As technology and AI requirements continue to evolve, costs will increasingly be affected by rising demand and longer lead times for tech equipment, supply chain uncertainty and chip shortages in some regions, with greater focus on future-proofing and scalable technology likely in 2026.

• As labor shortages are expected to persist in the short and long term, labor strategies will be critical to effective project delivery, with local workforce and talent pool assessments being an important element of individual project and portfolio-wide capital planning. Project planning will require particular focus on understanding local market conditions and limitations, vetting contractors and their capacities, and adjusting project plans where required.
• Supply chain management will demand a greater strategic focus as local nuances and raw material costs can make pricing increasingly unpredictable. Robust supply chain due diligence and proactive vendor engagement will be essential across all regions, with experienced project teams leveraging deep supply chain knowledge and established relationships for competitive advantage.
• Flexible technology infrastructure will be crucial to accommodate rapidly advancing AI solutions and their adoption. Evolving work requirements across all sectors, driven by AI adoption and shifts in skill sets, will transform office technology requirements, and infrastructure and design will have to accommodate evolving complexity while maintaining flexibility. Adaptable building systems and scalable technology platforms will become fundamental design requirements in 2026, ensuring that buildings remain viable.