Geopolitical tensions and AI demands drive global office fit-out costs up 6%

CHICAGO, April 16, 2026 – The global average cost of fitting out an office has increased by 2% to 6% across regions over the past year, driven by a complex mix of geopolitical instability, rising energy prices, skilled labor shortages and increasingly complex technology requirements, according to a new report from JLL. The 2026 Global Office Fit-Out Costs Guide finds that these pressures have pushed the global benchmark for a medium-quality corporate office fit-out to $2,150 per square meter / $205 per square foot.

The analysis of 68 cities worldwide reveals that while material prices have partially stabilized, new challenges are intensifying cost pressures. Geopolitical tensions, ongoing supply chain disruptions and U.S. trade tariffs – which were cited as a cost driver in 62% of markets surveyed – are creating significant uncertainty. Mechanical and Electrical (M&E) services and builders’ works are the largest components of a typical budget, accounting for up to 37% and 29% of total project costs, respectively. These categories are particularly exposed to rising copper prices, skilled labor shortages affecting 55% of markets and the intricate technology now required for modern offices.

“While we saw some stabilization in material prices in 2025, the story for 2026 is one of compounding complexity,” said Ruth Hynes, Global Project and Development Services Research Lead, JLL. “It’s no longer a single issue, but a confluence of persistent labor shortages, volatile energy prices and new geopolitical uncertainty that is now baked into project pricing. This report provides the critical data needed to navigate this new reality and make defensible investment decisions in an environment where cost predictability is a significant challenge.”

The report highlights that organizations can no longer treat cost management as a static exercise. With 88% of CRE leaders identifying energy savings as a top C-suite priority, the guide emphasizes a shift toward viewing smart M&E solutions as long-term operational investments rather than simple cost lines. Furthermore, the growing complexity of technology, from premium AV systems for hybrid work to the underlying infrastructure needed for AI, is becoming a baseline requirement that must be budgeted for from day one.

“In the current market environment, adopting a passive stance carries significant financial risk,” said Ben Jackson, Global Head of Development Services, Project and Development Services, JLL. “Early-stage risk mitigation has become essential to project success. We recommend clients integrate cost consultancy services from project inception to rigorously validate budget assumptions and execute strategic procurement strategies for critical long-lead components, particularly sophisticated mechanical and electrical systems. Establishing fixed-price contractual commitments as early as possible in the project, provides essential protection against supply chain volatility driven by energy market fluctuations and broader geopolitical uncertainties.”

Regionally, North America remains the most expensive market for fit-outs, with an average cost of $3,200 per square meter / $295 per square foot, significantly higher than Asia Pacific ($1,550/sqm), Latin America ($1,800/sqm), and EMEA ($2,300/sqm). The report identifies New York, San Francisco and Boston among the top five most expensive cities globally, with costs driven by broad economic conditions and intense competition for skilled labor. The findings also reveal that choosing an office layout typology is a major cost determinant, with the potential to vary project costs by 10%-13% before accounting for quality of finishes.

“North America continues to see elevated fit-out costs, influenced by ongoing trade tariffs and a shortage of skilled labor, particularly in mechanical and electrical trades," said Daniel Pomfrett, Managing Director, Cost Management for the Americas, Project and Development Services, JLL. "In major markets such as New York and San Francisco, strategic decisions around typology and specification have become increasingly important, as these choices can influence project costs by over 25%. Organizations should prioritize smart investments in technology and energy efficiency to create high-performance workplaces that deliver strong value for the capital investment.”

Sustainability demand is highest in EMEA, where ESG mandates and regulations are deeply embedded, making energy-efficient specifications and certified materials a standard requirement rather than a premium addition to project budgets. While APAC includes premium global hubs like Tokyo and Singapore, it is the most cost-effective region for fit-outs and offers many of the world’s most affordable markets. Technology costs are a particular concern in APAC, which is acutely affected by semiconductor and chip shortages that are driving up the price of AV, security and smart building systems.

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.

For more news, videos and research resources on JLL, please visit JLL’s newsroom.