- Six Greater China cities are ranked in the top 20 most expensive office fit out markets in Asia Pacific
- Hong Kong remains the costliest fit out market in Greater China
- “More considered” decisions see occupiers opt for quality over quantity
Persistent inflation, tight labor markets, and ongoing supply chain delays have increased average fit out costs across Asia Pacific, according to Cushman & Wakefield’s 2023 Asia Pacific Office Fit Out Cost Guide, but major occupiers are absorbing the higher spend in their quest to improve return-to-office rates.
Head of International Research and co-author of the report Dr Dominic Brown said that while fit out costs were up across the region by an average of 18% in local currency (7% in US$ terms), there were early signs of easing pressure.
“Although costs remain above historic levels, supply chain stress has eased slightly along with the cost of shipping, and declines from the commodities pricing peak in 2022 have reduced pressure on energy and fuel pricing. Inflation, while still high, is believed in many economies to have either peaked or to be close to peak,” Brown said.
The report showed that North Asia markets remained the most expensive to fit out in a Collaborative Hybrid style, with only Canberra, Australia, also appearing among the top five. Within the top 10, Hong Kong was the only market outside of North Asia and Australia/New Zealand to feature.
David Shi, Managing Director, Head of Project & Development Services, China, Cushman & Wakefield said that material or equipment lead time is the top priority issue to be considered for a fit out project in Greater China. "The 2023 report shows that six Greater China markets are ranked in the top 20 most expensive office fit out markets in Asia-Pacific. Hong Kong remains the costliest market in Greater China, followed by Beijing, Shenzhen, Taipei, Guangzhou and Shanghai.”
“Across China, we see advance materials planning and selection, particularly for imported materials or equipment, is a must-do in the current market conditions,” added YM Mok, QS Director, Project & Development Services, China, Cushman & Wakefield.
Cushman & Wakefield’s Asia Pacific Head of Project & Development Services Tom Gibson said that despite higher costs and constraints on capital expenditure, the conversation with occupiers remained focused on the changing working environment. “How much space do I need, and what is it going to look like?” he said. “Finding the balance between working from home and having people in the office — and how the right design can facilitate that — is still the number one conversation in most markets.”
Extended Report Format Better Reflects More Complex Client Needs
In addition to fit out costs, the report shows larger percentage increases for reinstatement and retrofit costs, although it notes that these were off a much lower base than fit out costs.
The report also contains sections on sustainability, technology, procurement, and workplace strategy and change management to better assist clients considering a fit out.
Gibson said the more comprehensive format would help clients as they navigated the increasing complexity of office fit outs post-pandemic.
“The office fit out process has taken on greater significance as occupiers look to their real estate to achieve their employee experience, sustainability, and diversity, equity and inclusion goals.
“Real estate decisions used to be made by only a handful of people within an organization. Now we see a more collaborative approach across business functions, with more emphasis on employee needs. Our conversations with clients are now about human resources as much as they are about construction.”
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 52,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2022, the firm had revenue of $10.1 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
