By: Bill Starcevich, Director, Project & Development Services
As class A corporate office improvement costs increase, Cushman & Wakefield’s Project & Development Services team takes a closer look at the causes, estimates typical pricing on 1st and 2nd generation space, and offers solutions for investors and occupiers.
Since the economic downturn of the last decade, the number of skilled tradesmen has failed to rebound to its previous level, while demand returned to and exceeded pre-recession levels. This shortage in the construction workforce is a major contributor to the recent trend of increased office space construction costs.
Beginning in April 2016, Cushman & Wakefield analyzed construction workforce compared to construction activity. The analysis confirmed that that there was a substantial gap between the supply and demand for skilled labor. Absent a decline in demand for construction work, or a substantial increase in the construction workforce, costs will remain high as compared to previous years. We do not believe that either of the scenarios is likely, and expect costs to remain historically high.
After revisiting the data in 2018, the gap between workforce and activity has increased. In addition, other factors including increased materials costs (due to high demand and general inflationary pressures), as well as changes in codes and legislation have pushed prices higher. The impact of recently announced tariffs on construction costs has yet to be seen in any substantial manner, but is likely to further increase costs if they are fully implemented.
Chicago Construction Cost Estimates
- Start your project early to maintain flexibility
- Leverage market knowledge to budget accordingly
- Evaluate your workplace for inefficiencies
- Explore existing conditions and reuse of construction and FF&E
Thinking about starting a project? Click here to download our infographic, and contact our team to strategically identify areas where cost savings can be achieved.
Bill Starcevich is a Director of Project and Development Services. He brings over twenty-two years of Chicago-area building experience, including base building construction and renovation, tenant improvements, and pre-construction consulting.