The reason: Higher costs and supply chain issues

 

According to JLL’s newly-released Australia Fit-Out Cost Guide 2022/2023 report, organisations throughout Australia, are paying more to fit out their offices, as inflation and supply chain disruption continue to have an impact. 

 

Office fit-out costs have risen by an estimated 15 per cent in the past 12 months, making it more challenging for tenants to secure the premium amenities needed to entice workers back on-site.

 

Prices rose during the pandemic when shortages of tradespeople and a range of supply-chain issues emerged due to poor trade conditions with China and Russia’s invasion of Ukraine. Although some of these challenges have since eased, prices have not returned to pre-pandemic levels.

 

The average fit-out cost in Australia is $2,662 per square metre, a 14.84 per cent increase year-on-year. 

 

Sydney is the most expensive city to undertake a fit-out in the country, at $2,765, closely followed by Canberra ($2,761) and Adelaide ($2,703), with Melbourne ($2,676), Brisbane ($2,554) and Perth ($2,552) trailing behind.

 

Across the country, average prices ranged from $1,997 per square metre for a base specification open floor plan with no enclosed offices, to $4,624 per square metre for a high-specification traditional office. 

 

Builders’ labour accounts for the highest proportion (43 per cent) of fit-out costs, while mechanical and electrical work remain the second largest component of costs (26 per cent).

 

The report indicates the issues impacting the cost of an office fit-out include geopolitical conflicts and extensive international lock downs due to COVID-19. Extreme weather conditions have also impacted the production of paints, glass, timber, laminates, joinery and steel, along with a shortage of containers continues to affect shipping times and costs.

 

Despite the increases to supply chain, labour and material costs and significant inflation pressures impacting fit-out costs, JLL Research expects businesses will continue to invest in better quality, sustainable and employee-focused workplaces.