Office Real Estate Fit-Out Costs Rise 5.5% Across Americas, Cushman & Wakefield Report Finds

Office fit-out costs across the Americas rose 5.5% year-over-year to an average of $149 per square foot in 2026, according to Cushman & Wakefield's 2026 Americas Office Fit-Out Cost Guide released March 24. The report covers 59 markets and is designed to help occupiers plan capital investments and relocation budgets.

The increase comes even as overall office construction activity remains subdued, with the development pipeline at a 25-year low. Despite limited new supply, cost pressures show no sign of easing in the near term.

No Near-Term Relief Expected in Office Construction Costs

According to the report, 79% of general contractors surveyed expect labor and material costs to rise over the next six months, with none anticipating declines. The findings also reveal a growing gap between supplier pricing and contractor pass-through rates: 83% of contractors expect suppliers to raise prices, but only 63% plan to increase their own pricing. The remaining 20% expect to absorb higher costs — up from 13% in the prior period.

"Office fit-out costs continued to increase across the Americas in 2026, even as construction activity remained subdued," said Andy Jansen, President of Project & Development Services at Cushman & Wakefield. "Contractors still expect labor and material costs to rise in the near term, with no expectation of declines."

Key Cost Drivers Shaping the Landscape

The report identifies several key cost drivers. Commodity prices, which eased following a 2022 peak, have risen again over the past year — particularly for copper and concrete. Copper demand is being driven by electrification trends including electric vehicles, data centers, and power infrastructure.

Tariffs on imported materials are expected to keep domestic pricing elevated. Labor remains a separate but equally significant constraint: construction employment growth across North America was minimal in 2025, while wage growth remained elevated and continued to outpace employment gains.

Electrical work accounts for the largest share of fit-out costs at 24% of total project expenses, while architectural millwork represents the smallest share at 3%.

Wide Variation Across Markets

Wide variation in fit-out costs across markets reflects differences in labor conditions, regulatory environments, and project complexity. San Francisco ($228 per square foot), San Jose ($224 per square foot), and Seattle ($223 per square foot) are the most expensive markets in the report. Higher costs in Western U.S. markets reflect elevated labor expenses, strong union presence, strict building and energy codes, seismic requirements, and higher operating and insurance costs.

At the other end of the spectrum, Argentina ($57 per square foot), Brazil ($79 per square foot), and Colombia ($84 per square foot) are the most cost-effective markets in the Americas. Latin America overall remains the most cost-competitive region at $108 per square foot, followed by Mexico at $119 per square foot, reflecting lower labor costs and less complex regulatory environments.

"The guide shows that office build-out decisions are being shaped by persistent cost pressure, selective demand and wide market variation," Jansen said. "Costs continue to depend heavily on location, labor conditions and project scope."

Regional Highlights

In the United States, fit-out costs increased approximately 5% year-over-year. The Northeast led regional growth at 7%, while the Midwest recorded the lowest increase at 2.1%. The Tri-State region posted the highest average costs at $193 per square foot. Gateway markets averaged $196 per square foot, approximately 21% above the U.S. average of $162 per square foot.

Brazil, Boston, and Los Angeles recorded the largest year-over-year increases at 50%, 19%, and 15%, respectively. Montreal, Toronto, Minneapolis, Detroit, and Costa Rica saw cost declines during the same period.

In Canada, costs have moderated from pandemic-era peaks but remain elevated, driven by labor constraints, wage growth, and trade uncertainty. The report notes that Class A tenant improvement allowances are increasing as landlords compete for high-credit tenants and respond to higher build-out costs. Occupiers are also demanding higher-end finishes, more collaborative layouts, and integrated amenities — all of which increase project complexity and cost.

Leasing activity remains selective, with demand concentrated in trophy and Class A buildings. In many major markets, Class A leasing has matched or exceeded pre-pandemic levels.

Sources: Cushman & Wakefield, 2026 Americas Office Fit-Out Cost Guide, March 24, 2026