Charlotte’s banking and FinTech start-up industries are driving significant demand for Class A office space at a time when tenant improvement costs are rapidly on the rise. Skilled construction labor hasn’t recovered since the 2008 recession yet construction demand has continued to soar resulting in an increase in labor costs. Additionally, changes in a variety of factors including codes and regulation, as well as steel and aluminum tariffs, have contributed to a rise in overall construction cost.
As such, tenant improvement costs have followed suit. From 2010 to 2018, total tenant improvement costs for Class A office space in North Carolina rose from an average of $70 per square foot (psf) to an average of $115 psf while allowances only grew from $35 psf to $65 psf. However, the psf per employee has dropped from 250 sf to 185 sf in that time, meaning tenants can take less space than before to build out.
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 first and second generation space, and offers solutions for investors and occupiers. Check out the infographic below for more or click here to download a copy.