The impact of inflation, tight labour markets, and supply chain disruption has pushed average fit-out costs up 16% in Australia in the past 12 months, according to Cushman & Wakefield’s 2023 Project & Development Services Fit Out Guide.
Across Australia, Australia’s capital city reported average fit-out costs of $2,592 per sqm, putting it well ahead of Sydney with costs of $2,304 per sqm. Melbourne and Brisbane followed with $2,253 and $2,203 per sqm, respectively, with Adelaide and Perth equally the most affordable to fit out on $2,119 per sqm.
The research examined fit-out costs across 32 major cities across the Asia Pacific region, evaluating the difference between basic hybrid, collaborative hybrid and advanced hybrid fit-out styles.
Not only was Canberra named Australia’s most expensive city to fit out on average, but it also ranked fourth among all major cities across the Asia Pacific region behind Tokyo, Osaka and Nagoya. Also in the top ten across Asia Pacific were Sydney at number seven and Melbourne ranked eighth priciest.
Asia Pacific Head of Insight and Analysis, Dr Dominic Brown, said that while fit-out costs were up substantially in Australia, organisations are absorbing the cost to keep pace with post-pandemic expectations.
“The fitting-out of office space has moved well beyond aesthetics, and amid the adoption of hybrid work models, how space contributes to a company’s financial, social, and sustainability goals is more important than ever,” Brown said.
Cushman & Wakefield’s APAC Head of Project & Development Services business Tom Gibson said the conversation with occupiers remained focused on the changing working environment
“Occupiers are increasingly wanting to create destination offices for their employees. ‘Destination’ means different things to different companies – it could be creating a hospitality feel, or more social spaces – but ultimately, it is about creating a ‘stickiness’ that makes people want to come to work.”
Cushman & Wakefield’s Head of Project & Development Services Australia Mitch Wilson said that demand from occupiers remains high, particularly as organisations upgrade space or relocate to strive for sustainability targets.
“We are seeing continued focus on sustainable outcomes incorporated in fit-outs inclusive of sustainably sourced materials, supply chains and ongoing energy reporting. Occupier clients are particularly drawn to sustainable buildings that already have high end credentials in sustainable practices,” Wilson said.
The breakdown of ‘all-in’ fit-out costs shows little variation across Australian states and no year-on-year change. On average, construction works contribute to just under a third of all expenses, with professional fees between 19% and 23%. Mechanical and engineering costs and furniture account for an average of around 20% each, with IT and Audiovisual at just over 10% of total costs.