It’s unclear how much tariffs and volatile trade policy will impact office buildouts, but companies already tightening their belts in anticipation of an economic slowdown are having to think carefully about their space plans.
As of the first quarter, office buildouts are costing an average of $245 to $335 per square foot, depending on office layout and space quality and complexity, according to Jones Lang Lasalle Inc.’s latest Fit-Out Cost Guide for the U.S. and Canada. That’s up slightly from the average cost range of $225 to $326 per square foot in JLL‘s 2024 Fit-Out Cost Guide.
The cost to build out an office depends largely on geography, with upfits in Pacific, Mid-Atlantic and Northeastern markets costing on the whole more than other regions of the country. New York City, San Francisco and Boston are the most expensive cities for office-buildout costs, according to JLL. Among the 18 major U.S. cities analyzed by JLL, it’s cheapest to upfit an office in Dallas, Phoenix and Miami.
Builders works — or core, on-site construction activities and services required to put foundational and structural systems into a building — occupies the highest share of office-upfit costs, at 38%. That’s followed by mechanical and electrical services (29%); furniture, fixtures and equipment (16%); security, information technology and audio-visual (10%); and professional services (7%).
Although materials, labor, technology and other expenses have been rising amid shortages and demand for the latest and greatest office space, especially since the Covid-19 pandemic, companies renovating or building out new offices in 2025 will be forced to reckon with a major question mark on costs.
As of May 12, U.S. consumers face an overall average effective tariff rate of 17.8%, the highest since 1934, according to an analysis by Yale University’s Budget Lab. The U.S. and China earlier this month agreed to a 90-day pause on the steepest tariffs issued thus far in 2025 — totaling 125% against goods imported from China — but most goods imported into the U.S. are subject to at least a 10% tariff newly imposed under President Donald Trump this year.
Louis Molinini, Americas head of project and development services at JLL, said every office-occupier client today is grappling with how to navigate uncertainty around tariffs, not to mention more constrained budgets as executives try to prepare for broader economic impacts on their organizations.
At the same time, most of those leaders want their workers back in the office three to five days a week, Molinini said. One of the major “carrot” approaches to luring workers back to the office since the pandemic has been offering a new — or heavily renovated — workplace, in a building replete with amenities or within a neighborhood near retailers, housing, food-and-beverage venues and other drivers.
“Getting people back to the office and attendance where it truly needs to be, as well as trying to fit within reduced capital budgets, is becoming a real topic on every single project we have,” Molinini said. “There are a lot of competing themes coming together, but at the center of all of it is needing to have a high-quality workplace.”
The cost data in JLL’s office buildout guide came from Q1 and was largely not impacted by tariffs, he said.
Companies are getting creative on where to reduce costs, including on things like finishes, lighting and furniture. Reusing furniture rather than buying all new, or using modular furniture systems, are other budget-conscious approaches being taken today, Molinini said.
There’s a fair amount of variance in buildout costs, based on specific materials and finishes, and the local labor market. The tariff threat makes it tough to predict how much change there may be not only in raw materials and labor costs, but also for investments like technology equipment, mechanical and engineering, and furniture.
Especially because of the current volatility, buildout and design planning is required from the very early stages of a company in the leasing process, Molinini said. That’s because the building a tenant ultimately lands on could mean, for example, having to build out fewer in-office amenities if the property already offers features like AV-equipped meeting spaces or tenant lounges.
It also means more — and earlier — conversations with landlords within the lease-negotiation process about tenant-improvement allowances and other investments being made in a building by the owner.
“It starts as early as possible to understand what are the requirements we need to be factoring into the building and design … can we select a building that can help us, then have that trickle down to good budget planning, closely managing the design, looking at alternative finishes,” and so on, Molinini said.
Despite the potential for increased wariness around real estate budgets because of the international trade war on tariffs, companies are still following the flight-to-quality trend, Molinini said, referring to an overall preference for so-called trophy buildings in a market. A recent Future of Work survey by JLL found 59% of surveyed organizations in the U.S. and Canada said they planned to increase their investment in office fit-outs in the next five years.
While it’s tough to predict how tariffs and the broader economy will play into office-buildout costs, Molinini said companies are now budgeting for contingencies in office buildouts.
“I think that’s the biggest guidance — we can’t assume [tariffs are] not going to happen, so let’s start planning for it and looking at other types of materials that may be produced in other parts of the world,” he said.
