How AI tools help fight rising construction costs

When rising tariffs, extreme supply chain volatility and a historic construction labor shortage threaten to push office project budgets out of reach, occupiers cannot afford a reactive strategy. In this article, JLL experts outline how forward-looking organizations can navigate 2026’s challenging fit-out landscape by deploying predictive analytics and initiating stay-or-relocate evaluations early. Discover how these proactive measures can deliver up to a 5% reduction in capital expenses through early visibility of scope drift, while securing the critical lead times needed to protect your real estate investments.

Construction costs for commercial fit-outs are climbing due to tariffs, supply chain volatility and labor shortages, while skilled trade availability keeps shrinking. Project managers are countering this with predictive analytics tools that forecast cost swings, flag scheduling risk and identify savings months in advance — helping occupiers deliver renovations on time and on budget despite the pressure.

If you've worked with a JLL project management team on a past fit-out, you already know the market's gotten harder to predict. Companies investing in offices and other workspaces face a critical challenge: employees expect modernized workplaces with flexibility, easy-to-use technology and premium amenities, yet construction costs keep rising.

The stakes are clear. An overwhelming 78% of business and CRE leaders say AI will significantly impact their portfolio strategies over the next three to five years, according to JLL's 2026 Future of Work Survey. Organizations want AI-enabled, premium-quality portfolios but face dual investment pressures: rising costs layered with new infrastructure and technology demands.

Fortunately, project managers are pairing their commercial real estate experience with advanced predictive analytics tools to estimate capital costs and build procurement strategies that deliver high-quality projects on time and on budget.

Project management teams are also using predictive analytics to fine-tune design and scheduling, identify savings in materials, equipment and labori and keep tenant improvement projects running smoothly from day one of planning.

78% of business leaders say AI will significantly impact their CRE strategy over the next three to five years.

JLL Future of Work Survey

Today's construction environment is a convergence of economic, operational and regulatory uncertainties that’s fundamentally reshaping project delivery.

"The key pressure points include evolving workplace patterns, which are reshaping office demand, and persistent inflation, which is driving up material and labor expenses," says Jaymie Gelino, JLL's Global Chief Operating Officer, Project and Development Services.

According to our latest Construction Perspective report, three independent forces are driving costs higher simultaneously:

"Many companies must now consider multiple supply chains rather than single sourcing, which increases project complexity. Many projects must also spread their geographic reach for labor, which then increases pressure on surrounding areas."

— Daniel Pomfrett, Americas Cost Management Lead at JLL.

Experienced project managers have long applied market knowledge to guide clients on lease negotiations, space planning and cost estimating. Now they’ve got advanced data analytics tools that predict cost fluctuations, market swings and project timing months in advance.

“Predictive analytics let us deliver projects faster, safer and more profitably than traditional management approaches,” Gelino says.

Much of that capability runs on JLL Falcon, our AI platform built on billions of global data points and more than a decade of investment in AI and PropTech. It's not a separate tool clients have to learn — it's built into how project managers already advise clients, from macro cost trends down to city-level pricing.

Data-driven platforms strengthen project delivery across:

• Project scheduling: intelligent timeline optimization and resource forecasting that identifies risks and acceleration opportunities weeks in advance
• Budget control: detailed financial modeling and cost variance prediction that reduces budget overruns
• Risk management: delivery assurance and safety protocol optimization
• Strategic capital prioritization: data-backed decisions on where to invest and when
   

"We look at factors at the macro level, but we also dive into the micro as well. For fit-out costs, that precision around current cost trends at a city and market level helps clients make key decisions."

— Daniel Pomfrett, Americas Cost Management Lead at JLL.

For the first time in 15 years of JLL Future of Work research, skills gaps have overtaken budget challenges as the key constraint on real estate transformation. The capability deficit involves:

• Skills gaps in AI, analytics and emerging technologies
• Limited change management expertise for AI-driven transformation
• Difficulty reporting the right metrics to demonstrate CRE value
   

Even organizations with adequate budgets cannot drive change if they lack the AI expertise to guide technology selection, the change management capability to drive adoption or the measurement tools to demonstrate value.

Despite rising costs, leading companies continue to prioritize Class A buildings and premium workspaces as strategic investments.

"The flight to quality reflects several key drivers: talent attraction in a competitive labor market, operational efficiency through advanced building systems and brand positioning that reinforces corporate credibility," Gelino says.

Pomfrett agrees: "Firms want to create environments that appeal to their new and existing talent. They're looking for Class A buildings with LEED and WELL certifications that provide an additional layer of future-proofing because of their upgraded systems."

If you’re got less than two years left on your lease, the decision point is now: stay and renovate, or relocate to newer space. Either path takes significant upfront investment, which makes cost assurance and control measures critical to get right early.

Gregory & Appel’s sudden move
 

When a nearby construction project disrupted operations at its Indianapolis headquarters, insurance company Gregory & Appel had to decide quickly: move or stay. Within 14-16 months, JLL helped the company find a new location, negotiate terms and manage the move and fit-out.

The results exceeded expectations. Gregory & Appel expanded to span the entire building floor within three months, and JLL's construction management team cut the budget by an additional $500,000 —letting the client to buy new furniture at essentially zero out-of-pocket cost.

Pure Gym sees progress from afar
 

Pure Gym was considering an expansion into U.S. markets, but the U.K.–based company didn't want to splurge on frequent overseas travel. Instead, they relied on JLL's use of OpenSpace to monitor construction and manage the project from afar. The company could walk through prospective sites virtually, examine building features in detail and simulate how their gym members would move through different floor layouts. As material and labor costs keep climbing, tech-driven alternatives like this create real opportunities for budget savings.

JLL's Project and Program Management team can walk through what these cost and labor trends mean for your specific market and timeline.