9
The cost of an office fit-out EMEA Perspective CORPORATE SOLUTIONS RESEARCH
The cost of an office fit-outEMEA Perspective
CORPORATESOLUTIONSRESEARCH
Despite recent uncertainty, demand for office fit-out projects has intensified as business activity across the EMEA region has improved, reaching levels last seen
in 2008. Changes in working practices and value-add solutions have seen the workplace rise up on the
corporate agenda.
“Making it happen” is central to the transformational strategies of many businesses. JLL believes in the big aspirations that live within every new workplace design and fit-out, and we deliver the broader
definition of success, with scale and competency like no one else.
We call this
Inspiration, delivered.Much has been written on the type of space needed to support a modern, flexible and attractive workspace. However when considering an office fit-out, the question remains – how much will it cost? Although guidance exists on a range of costs, these parameters can often be too wide to aid decision making. Using our extensive network of JLL project managers and cost managers, workplace designers and Tetris, JLL’s in-house design and build contractor, we have priced an actual project in a consistent
way across 19 countries, providing directly comparable costs for a modern corporate standard of fit-out. The costs outlined below reflect the specific ‘priced scheme’, which assumes the building is well located in the Central Business District (CBD), with base build completed less than 12 years ago. Naturally, typical costs will vary depending on the exact location, scope of works and base build conditions.
€745 Brussels
€880 London
€830 Dublin€805 Amsterdam
€865 Paris
€630 Madrid
€600 Lisbon
€600 Milan€380 Belgrade
€570 Istanbul
€510 Bucharest
€500 Budapest
€510 Bratislava
€500 Warsaw
€835 Frankfurt
€530 Prague
€695 Moscow
MEA
€340 Johannesburg
€815 DubaiEMEA Office
Fit-out Costs
Total fit-out cost €/sq m
Cost data was collated from JLL’s integrated network of project managers, cost managers, workplace designers and Tetris design & build team
• Mature markets in economic hubs including London, Paris, Frankfurt and Dublin are the costliest locations for office fit-out in EMEA. Cost premiums in these cities range from 45-55% more than the average cost for other cities.
• As activity intensifies, saturation in hot local markets is testing the ability to deliver projects at short notice.
• Gulf state cities, such as Dubai, offer little discount to prime locations, and costs remain above the regional average.
• Moscow has gone from being one of the most expensive cities to offering good value, mainly due to Forex changes but also due to subdued demand with increased competitive tendering.
• Johannesburg has benefited from Forex depreciation, with the Rand down 35% against the USD in the last 12 months, resulting in effective fit-out costs being at long term lows.
• Tenant and Landlord obligations for fit-out costs vary as defined by the terms of individual leases and the nature of local real estate markets. In some cases landlords assume responsibility for fit-out, reflecting the cost in the rent, whereas in others the tenant is responsible.
FindingsKey
H1 2016
points to6considerComparing costs between countries is vital for companies
with capital expenditure programmes. EMEA is a diverse region, subject to a broad range of fit-out costs, regulations and norms. This can create challenges for
companies entering new markets.
THREATS: Security, risk and transparency
Concerns about the wider economy, geopolitical instability and broader security issues continue to weigh heavily. This is unlikely to derail fit-out projects; however, markets reliant on imports, or subject to sanctions or security risks, could face challenges.
Manage risk and uncertainty by partnering with experts
CURRENCY: Volatility can impact capital allocation
Currency fluctuation can trigger movement in relative costs, impacting how companies decide to allocate capital across the region. When reporting in a major currency, such as the dollar, devaluation in local market currencies can result in fit-out costs appearing to be at a long-term low.
Navigate currency volatility by benchmarking costs locally
COST INFLATION: Fit-out costs will increase in several markets
In some markets capacity in key trades and supply chains is driving cost inflation, stretching budgets and delaying delivery. Across the region, inflation varies regarding the labour and material cost elements and should be considered. Similar trends apply to the professional services sector.
Understand how costs will fluctuate to aid decision making
points to6consider
LABOUR: Capacity shortages are testing ability to deliver
In mature markets suppliers remain selective and labour shortages are testing their ability to deliver at short notice. In less mature markets, notably some MENA markets, a shortage of quality contractors that understand international guidelines can impact pace and quality of delivery. It is more common for professional services to work across the region remotely, and local presence in some instances is hard to find.
Plan ahead to mitigate challenges to cost and programme
MATERIALS: Availability of materials and supply chain risks
Supply chains are becoming strained as activity intensifies, resulting in longer lead-in times and material cost inflation. The cost of imported materials and equipment can be impacted by duties and other logistics costs. Customs and sanctions create additional challenges in markets reliant on imports. Locally manufactured materials may be attractive, but may not benefit from such consistent quality or corporate standards.
Budget for supply chain constraints in some markets
MARKET PRACTICE: Varied local practices and guidelines
The landlord’s standard finish of delivery varies across EMEA, as do the roles and responsibilities of those delivering projects. Contractors may require up-front payments in some markets, whereas in others, the practice may differ. In the UK, office fit-out tends to be undertaken by the end-users, whereas in Germany & some associated markets, landlords typically offer a turnkey solution.
Factor in local market practices to project planning
As part of the transformation of JLL’s EMEA HQ, the upper floor of the Warwick Street, London office was redesigned, providing a collaborative working environment to the best of new standards.
Key FeaturesDynamic workplace • Non-allocated desks for all
users
• No cellular offices
• Mixed types and heights of workspaces, facilitating breakout and collaborative working
• Single occupancy phone rooms for privacy
Technology-enabled • Programmable phones and
universal IT connectivity
• Large screens and TVs throughout
• Space utilisation tracking
Client-facing space• Reception area
• Meeting rooms of multiple sizes
Lifestyle• Lockers for resident staff
• Cafe area
The project had five goals to achieve: a flexible, sustainable, innovative, collaborative and productive work environment. The area provides space for 120 staff and acts as a showcase in how to adopt collaborative working practices in a practical cost-effective solution. The project was delivered by an integrated JLL team, including project managers and cost managers, workplace designers and Tetris, the JLL in-house design and build contractor.
The pricedscheme
The pricedschemeProject Delivery• Fit-out implemented by a general contractor
with sub-contractor trade specialists
• All fees relating to design, cost management and project management are included
• Five month design and construction schedule
• All work undertaken as a single contract and within normal working hours
• No work required to the toilets and common areas. All standard services are available in the building, and the base building has the necessary infrastructure to support the fit-out
• The following was not included in cost of programme: internal blinds, security installations, all insurances, VAT/sales tax, furniture, site acquisition costs, local authority fees, financing charges, inflation, marketing costs
Pricing AssumptionsFit-out price locally based on the assumptions below;
• The building is well located in the CBD, with base build completed less than 12 years ago.
• Fit-out quality is of international corporate standard.
• Costs are based on new CAT B fit-out from CAT A standard. (CAT A is a typical landlord provided blank box including raised floors, suspended ceiling, basic mechanical and electrical services, internal surface finishes as well as communal areas).
• The base date for pricing information is Q1 2016. Exchange rates from Q1 2016 have been applied to the cost data to present it in Euros throughout.
• Over the last few months, fluctuating foreign exchange rates have posed a challenge. When using this report please therefore be conscious of the fluctuating foreign exchange rates as this can impact on relative costs.
Inspiration, delivered.These two simple but powerful words capture JLL’s fit-out approach. Inspiration, because the heart and soul of what we do is
grounded in your strategic vision and aspirations and in discovering creative ways to realize them. Delivered, because the most inspired vision is of little use without execution. In JLL, you will find a partner who is strong on both sides of the equation: vision
and execution. Inspiration, delivered.
Business Contacts
Bernard TylerLead Director - EMEA Project & Development Services+44 (0)207 852 [email protected]
Denis MavrokefalosDirectorCost Management+44 (0)207 852 4136 [email protected]
Martin PittEMEA Head of Program Management +44 (0)207 852 4117 [email protected]
Christina SiglianoEMEA Business Development Director+44 (0)207 087 [email protected]
Karen WilliamsonDirector EMEA Corporate Research+44 (0)203 147 [email protected]
Tom CarrollHead of EMEA Corporate Research+44 (0)203 147 [email protected]
Research Contacts
Jones Lang LaSalle© 2016 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to Jones Lang LaSalle and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of Jones Lang LaSalle and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of Jones Lang LaSalle. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.
www.jll.eu
