Lisbon is one of the most expensive locations in Southern Europe for the renovation of a “high quality” office

Cities in the UK and Germany are the locations in the EMEA region with fit out (fit and finish) of taller offices as occupants prioritize environments that promote collaboration and productivity and support sustainability goals, according to a new report from Cushman & Wakefield.

The global real estate services company’s “EMEA Office Fit Out Cost Guide 2024” analyzes 43 key cities in Europe, the Middle East and Africa, establishing the average costs of adaptation works, of various quality levels, with the aim of helping occupants to define office relocation budgets.

The average cost per city shows that locations in Germany and the UK far outpace those in other parts of the EMEA region. London occupies first place, with an average of 2,629 euros/m² for office adaptation. Hamburg, second on the overall list, was the most expensive city in the Northern European region, at 2,463 euros/m². Prague (1,252 euros/m²) was the most expensive city in Central and Eastern Europe, while Paris led in Southern Europe (1,190 euros/m²). Cairo (1,759 euros/m²) and Riyadh (1,650 euros/m²) were the most expensive cities in Africa and the Middle East, respectively. Lisbon appears as one of the most expensive cities in terms of “high quality” renovations when compared to the other cities in Southern Europe analyzed.

The costs of fit out across the EMEA region they have increased by an average of 4% (in euros) over the last year, with a current average of 2,295 euros/m² in turnkey processes. The high retrofit costs in the UK and Germany are being further driven by high expectations in these regions in terms of design sophistication, technological solutions and quality.it out.

In the opinion of Nic Wilkinson, Chair of Project & Development Services EMEA at Cushman & Wakefield, “The office market is undergoing significant structural change at a time when the global economy is facing headwinds, which are cyclical and result in scrutiny of capital expenditure budgets. If we add the need to take into account business cycles, underlying market, it is easy to understand why many believe that the current context has never been more complex. Without undervaluing the scale of these issues, they can be summarized as costs, carbon and culture. Offices play an important role in each of these areas, promoting an environment in which employees can be productive, innovate and have positive relationships with colleagues; whilst creating value and helping to achieve the company’s sustainability and inclusion objectives.”

It is expected that the focus will remain on the best quality of office space. With fewer development options, some tenants may choose to renew or extend their lease if they are unable to secure suitable space. The combination of macroeconomic factors and demand for offices suggests that the most severe pressure on construction costs has already been overcome. According to Eurostat, the increase in construction prices in the euro zone reached 12% in 2022, having decreased to 6% in 2023.

Wilkinson adds: “We have seen a growing demand for quality office space and we also expect this behavior in hiring from construction companies. While overall space needs may have decreased compared to last year, major operators are expected to continue to register a healthy demand for their services. Furthermore, we believe that the type of adaptation also needs to evolve. Those looking for offices are dedicating a greater proportion of space to collaborative work and the well-being of employees, the latter being a area that, over the past few years, has recorded consistently low scores in terms of workplace experience.”