• 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.

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.

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.