Geopolitical headwinds and structural labor constraints reshape North America office fit-out costs

CHICAGO, May 13, 2026 – The cost of building a modern office in the U.S. and Canada has been structurally reset, with average fit-out costs now reaching $295 per square foot for a medium-quality space, according to the new U.S. and Canada Office Fit-Out Costs Guide 2026 from JLL (NYSE: JLL), sampling 50 cities across the two markets.

Outpacing the global benchmark for medium-quality fit-outs ($205/sq ft) is driven by persistent structural pressures and limited supply while the competition for talent is making investment in high-quality, tech-enabled space a business imperative.

The demand for higher quality space is intensifying just as the supply of premium office space is shrinking. Office availability has now fallen for an unprecedented seven consecutive quarters in the U.S., while the construction pipeline remains at historic lows. As a result, occupiers are competing for a limited pool of high-quality existing space, making strategic renovation and fit-outs the primary pathway to securing the AI-ready, talent-attracting environments they need.

Technology is the new standard for a competitive office, with previously premium offerings like integrated building systems and advanced AV now considered baseline requirements. This new standard is clearly reflected in project budgets: Mechanical and Electrical (M&E) services now account for 29% of a typical fit-out, with Security, IT, and AV (SITAV) representing another 10%. Combined, these technology-related systems make up nearly 40% of total costs.

Compounding the costs of this technical demand the report identifies several persistent structural factors driving a challenging cost environment. Trade and tariff policies continue to impact the cost of construction materials, while global energy instability affects supply chains. In tandem, structural labor shortages are creating acute scarcity in the technically skilled trades most relevant to building out today's complex, AI-ready workplaces.

"Clients who are holding out for costs to come down before committing to a project are taking a real risk," said Louis Molinini, Head of Project and Development Services, Americas at JLL. "The structural pressures – labor, trade, technical complexity – are not going to unwind on a timeline that favors waiting. The primary way occupiers compete for talent right now is through the quality of their space, and the bar for what that means has moved up considerably."

In this dynamic environment, the report cautions that a ‘wait-and-see’ approach carries significant risk. JLL’s analysis finds that trade and labor cost impacts are expected to compound faster than any anticipated relief from interest rates. Organizations that act decisively now to invest in high-performance space, ahead of policy relief, will be better positioned to manage costs, avoid further escalation risk, and secure a long-term competitive advantage.

"That cost variance is often driven by local labor dynamics," said Daniel Pomfrett, Managing Director, Cost Management at JLL. "The spread between a baseline fit-out at approximately $255 per square foot and a high-specification buildout at $355 per square foot is significant, but that gap can widen even further depending on the market. That’s the conversation clients need to be having at the front end of capital planning, not after budgets are set."

Fit-out costs across the U.S. and Canada move in the same direction but not at the same speed. New York anchors the high end of the cost spectrum, with San Francisco and Boston close behind. While mid-range markets like Chicago and Seattle are more competitive than the coastal gateways, the Sun Belt markets—including Dallas and Atlanta—represent the most competitive end of the spectrum, supported by larger and more flexible labor pools that have absorbed the current cycle's cost pressures more readily.

Canadian markets present their own unique dynamics. Office fit-out costs are up 3 to 4 percent in 2026, with cities like Toronto and Vancouver consistently landing at or above the upper cost range of comparable U.S. secondary markets, reflecting distinct structural labor costs and regulatory environments. This creates consequential uncertainty for occupiers managing cross-border portfolios, especially as the mid-year USMCA review is expected to have consequences for materials and tariffs on both sides of the border. However, Canada's relative insulation from global energy price volatility through its domestic supply may mitigate some of the larger cost swings threatening other global markets.

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JLL Project and Development Services is a leader in the advisory, design, management and delivery of commercial real estate projects for the world’s most prominent corporations, educational institutions, public jurisdictions, healthcare organizations, industrial facilities, retailers, hotels, sports facilities and real estate owners. JLL’s project management team comprises 9,300 project managers across 80 countries with $87.4 billion in projects managed annually. JLL’s design teams consist of 600+ designers across 65 studios in over 30 countries, to service clients with end-to-end design solutions. Visit to learn more.