emea 2019 fit-out cost guide | sq. meter · office fit-out costs by city € - € 200 € 400 €...

EMEA | 2019

Fit-OutCost Guide

ContentsIntroduction 3

Highlights 2019 5

Office fit- out costs 6

Current trends 9

Methodology 11

Transforming the places where you work 14

EMEA Fit-Out Cost Guide | 20192

Hello,

Bernard TylerChief Operating OfficerEMEA Project & Development Services and Tétris

Welcome to the EMEA Fit-Out Cost Guide 2019, a powerful tool to help you to understand the real cost of fitting out office space across the EMEA (Europe, the Middle East and Africa) region, as well as the trends and circumstances impacting fit-out costs in different EMEA markets.

The EMEA Fit-Out Cost Guide provides an index for the cost of fitting out office space in diverse EMEA markets, showing how fit-out decisions can affect your bottom line. Other guides provide a wide range of costs, but often these are based on varied scopes, client delivery methods, timescales and procurement. This can lead to data that is too vague to support decision-making, often creating an imprecise comparison. This guide takes the data a step further by taking into account local practices and pricing an actual project in a consistent way, providing directly comparable costs for a leading corporate standard of fit-out.

For the publication of previous guides, we relied on JLL’s European headquarters in London as the basis for our benchmarking exercise – directly comparing its standard to other EMEA markets.

This year, we have decided to evolve our report by using a new benchmark office: JLL Amsterdam. Known locally as ‘The City Within,’ the Amsterdam office was designed and built by Tétris with management by JLL’s Project & Development Services team, opening in late 2017. A state-of-the-art working environment, JLL Amsterdam reflects the latest evolution in the workplace experience.

Our 2019 guide covers markets in 22 EMEA countries.When combined with our guides for Asia Pacific and the US and Canada, this guide offers a global perspective as well as local market insight. By comparing costs you can see the impact that location may have on the cost of an office fit-out.

Working as one team across EMEA, we thoroughly enjoyed creating this comprehensive update and are excited to share the findings with you. Understanding the costs of fit-outs in different markets will help you to mitigate any uncertainties in your cash flow management and make better decisions around your real estate portfolio.


WhyThis guide:

• Enables you to make informed decisions about your real estate portfolio

• Provides a powerful tool to help you to understand the real cost of fitting out office space across the region

• Provides a global perspective on the cost of fitting out office space when combined with our Asia Pacific and US and Canada guides

WhatThis guide details costs for a specific ‘priced scheme’, which assumes the building is a new build and well-located in the Central Business District (CBD). Naturally, typical costs will vary depending on the exact location, scope of works and base build conditions. However, we’ve attempted to simplify the comparison by relying on one office floorplate and specification across the region.

HowCombining the efforts of our extensive network of cost managers, project and construction managers and workplace designers, JLL and Tétris worked together to deliver comparable costs and an understanding of local market practices for a modern corporate standard of fit-out.


2019

Fit-out costs

Most expensive markets EU GDP growth 2019

EU ConstructionConfidence Index

(April 2018 - April 2019)

EU unemployment 2019Regional average

Operating environment

ParisLondonDublin

€1,337.77/m² 1.5% -0.8 pts6.5%

Highlights 2019

Source: JLL, European Commission and Oxford Economics, May 2019

The use of an arrow reflects the year-on-year change 2018 / 2019

• Mature markets like Paris, London and Dublin remain as the top cities for total costs for an office fit-out. Costs are being driven up by challenges in the workforce and often material pricing including furniture and technology.

• Central and Eastern European markets, while relatively lower than their Western counterparts, are not without their own challenges and factors influencing costs.

• Emerging markets across the MENA sub-region are still affordably priced overall but increasing over time as they continue to mature – especially as major international companies expect similar standards globally

• There is a noticeable labour shortage of sub-contractors - a wider trend in the construction industry as a whole.

• Fluctuations in currency markets continue to influence pricing across the region. Some suppliers factor this volatility into their prices.

• The standard of the office fit-out is changing. Employees expect more out of their workplace and international companies are increasingly investing in their offices. The rise of the flexible office market has increased expectations, giving more choice and leading to the consumerisation of real estate.

• Local and regional nuances can regularly complicate accurate budgeting on an international basis. Considering total costs early in the fit-out process will help prepare for potential disruptions in a fast-paced, connected world.

Typical fit-out cost breakdown

58%

17%

5%

20%

Construction

AV & data

Professional fees

Furniture

17%

5%

20%

58%

Source: JLL, 2019


Office fit-out costs

Source: JLL, 2019

Total fit-out cost €/m(Includes AV / Data, professional fees and furniture)

€ 1,498/m²Brussels

€ 1,359/m²Prague

€ 1,798/m²Paris

€ 1,615/m²Berlin

€ 1,156/m²Budapest

€ 1,643/m²Dublin

€ 1,264/m²Milan

€ 1,604/m²Luxembourg

€ 1,249/m²Casablanca

€ 1,472/m²Amsterdam

€ 1,118/m²Warsaw

€ 1,039/m²Lisbon € 875/m²

Bucharest

€ 1,375/m²Moscow

€ 1,426/m²Riyadh

€ 1,296/m²Bratislava

€ 1,436/m²Johannesburg

€ 1,057/m²Madrid

€ 1,066/m²Istanbul

€ 1,328/m²Dubai

€ 1,095/m²Cairo

€ 1,690/m²London

Cost data was collated from JLL’s network of local cost managers, project managers, workplace designers and Tétris’ Design & Build team.


Office fit-out costsBy City

€ - € 200 € 400 € 600 € 800 € 1,000 € 1,200 € 1,400 € 1,600 € 1,800 € 2,000

Warsaw

Riyadh

Casablanca

Prague

Paris

Moscow

Milan

Madrid

Luxembourg

London

Lisbon

Johannesburg

Istanbul

Dublin

Dubai

Cairo

Budapest

Bucharest

Brussels

Bra slava

Berlin

Amsterdam

Construc on AV & data Professional fees Furniture

Source: JLL, 2019


City-by-city Index

We priced each market based on the local market pricing standard and then applied a conversion to the Euro to provide an easy comparison. Furthermore, we indexed each market to the Amsterdam benchmark office. However, we have also provided the local currency so that you too can build your own comparison based on your local market.

City O�ice fit-out cost (€/sq m) O�ice fit-out cost (local currency/sq m) Cost index (AMS)

Paris €1,798.36 € 1,798.36 1.22

London €1,689.68 £1,446.20 1.15

Dublin €1,642.65 €1,642.65 1.12

Berlin €1,615.29 €1,615.29 1.10

Luxembourg €1,603.79 €1,603.79 1.09

Brussels €1,497.72 €1,497.72 1.02

Amsterdam €1,472.12 €1,472.12 1.00

Johannesburg €1,435.95 ZAR 22,803.60 0.98

Riyadh €1,425.82 SAR 6,000.28 0.97

Moscow €1,374.69 RUB 100,893.38 0.93

Prague €1,359.22 CZK 35,050.32 0.92

Dubai €1,327.77 AED 5,472.47 0.90

Bratislava €1,295.71 € 1,295.71 0.88

Milan €1,264.41 €1,264.41 0.86

Casablanca €1,248.83 MAD 13,547.56 0.85

Budapest €1,155.65 HUF 371,679.68 0.79

Warsaw €1,118.38 PLN 4,806.08 0.76

Cairo €1,095.19 EGP 21,297.03 0.74

Istanbul €1,066.16 TRY 6,571.65 0.72

Madrid €1,057.05 € 1,057.05 0.72

Lisbon €1,039.48 € 1,039.48 0.71

Bucharest €874.97 RON 4,166.93 0.59


Current TrendsEU Construction Confidence

Looking at the last ten years, confidence in the European construction industry has never been so high at the start of the year, according to Eurostat’s Construction Confidence Indicator. This is usually expected as the confidence is largely seasonal, but low interest rates are contributing to increased confidence over the long-term as it has steadily increased annually since 2013.

1. Instability and disruptionGeopolitical uncertainty is at elevated levels and this can directly impact strategic decision-making around real estate as location options are carefully weighed and considered. Risk is beginning to be factored into the budget-setting process.

Many former low-cost centres have gradually become more expensive from a fit-out perspective due to a long spell of growth in property demand across Europe. Shifts in location preferences and increases in leasing activity have reduced choice for companies. Dublin is an example of this where demand has vastly outpaced supply putting a strain on the local market.

Supply chain disruption is another by-product of elevated global uncertainty. Any disruption to negotiated trade agreements will be passed on directly to the end consumer when applicable and alterations in customs procedures could have an impact on just-in-time manufacturing and shipping practices. Considering the source of material, acquisition is now a factor in pricing and estimating for a project. Relatedly, any disruption to supply can take its toll on project timelines impacting even the most well-planned budgets.

-50

-40

-30

-20

-10

0

10

Apr-0

9

Aug-

09

Dec-

09

Apr-1

0

Aug-

10

Dec-

10

Apr-1

1

Aug-

11

Dec-

11

Apr-1

2

Aug-

12

Dec-

12

Apr-1

3

Aug-

13

Dec-

13

Apr-1

4

Aug-

14

Dec-

14

Apr-1

5

Aug-

15

Dec-

15

Apr-1

6

Aug-

16

Dec-

16

Apr-1

7

Aug-

17

Dec-

17

Apr-1

8

Aug-

18

Dec-

18

Bala

nces

%

EU Construction confidence indicator EU long term average

Source: Eurostat, European Commission

2. CurrencyCurrency volatility is nothing new nor unexpected. However, when combined with elevated geopolitical uncertainty, its impact is amplified.

The Turkish Lira has been the most volatile by far of all the markets that we track. This has had a direct effect on the costs of importing materials which could have as much as a 30% mark-up on total pricing.

Similar volatility in South Africa often plays a factor in pricing. Often, a premium is applied to logistics costs to account for currency fluctuation. Alternatively, pricing to the much more stable US Dollar is not uncommon in order to protect against Rand unpredictability.

3. The rise of FlexAs we noted in our recent report, “Disruption or Distraction”, the growth of flexible space and coworking are proof of a structural shift in occupation that will have a lasting impact on the wider real estate market for years to come.


Source: Thomson Reuters

Movement relative to Euro Apr 2018 - Apr 2019

-15% -10% -5% 0% 5% 10% 15% 20% 25% 30%

Egyptian Pound

UAE Dirham

US Dollar

Saudi Riyal

Swiss Franc

Moroccan Dirham

Britsh Pound Sterling

Swedish Krona

Czech Koruna

Polish Zloty

Romanian Leu

Hungarian Forint

Russian Rouble

South Africa Rand

Turkish Lira

The modern employee wants to be able to work in multiple locations and expects more from their place of work. Flex providers are looking to create spaces that meet these lofty expectations on a regular basis. Developers and traditional investors are seeking to bring new ideas and user-focused offices into their existing portfolios. Perhaps most critically, corporates and major office occupiers are looking at the rise of flex space as inspiration for their workplace strategies.

All this activity has led to a large influx of refits and new designs that has directly impacted the pricing of office fit-outs. The typical office fit-out for an organisation seeking to deliver a workplace that attracts talent is now far more than four walls, a drop-ceiling and ergonomic furniture. The inclusion of specialised joinery and experiential real estate has further driven up the costs of fit-outs and led to more choice in the process of choosing an office that meets expectations.

For all the flexibility in leasing terms that flex space has introduced to the real estate decision-making process, it has also impacted the wider fit-out cost environment. Higher quality services, amenities and design have all become more important in the workplace. This has had a tangible impact on the potential costs associated with relocations and new openings but also with capital-intensive projects.

4. Local Market PracticesLocal market practice has a tremendous impact on pricing and delivery. Thorough due diligence is one way of mitigating some of the risks and additional costs this can create when completing budgets, procurement, and contracts.

Standard of delivery• The landlord’s standard finish of delivery continues to vary

widely across the EMEA region. For example, in the UK and France, fit-out tends to be undertaken by end users, whereas in Germany landlords typically offer a certain level of fit-out. This varies from project to project, with occupiers sometimes surprised by the extent of work still required in markets where the landlord assumes responsibility.

Standard of design• What may be considered a high-end design in one market

may be considered the norm in others. For example, in some of the MENA markets, not all new workplace trends have been adopted, and some materials do not exist locally, causing an increase in costs due to international shipping. Interestingly, in some CEE countries along with South Africa - the standard of design is not that different from Western European markets. However, building assessments such as BREEAM are not universal nor often considered in designs.

• A high reliance on custom joinery too will impact greater pricing. This varies market-to-market, but a reliance on joinery in place of furniture is not a universal trend and our inclusion of it impacted the pricing in all markets.

Labour Access• Nearly every European market reported a shortage of labour.

And if it wasn’t a shortage, it was access to affordable labour as often taxes and the bargaining power of organised labour unions may directly impact increased costs. In France, where there is a noted shortage in some trained vocations,


Typical Fit-Out Cost Breakdown by City

City Construction AV and data Professional fees Furniture

Amsterdam 62% 20% 4% 14%Berlin 56% 20% 7% 17%Bratislava 54% 18% 6% 22%Brussels 64% 19% 3% 14%Bucharest 54% 21% 3% 22%Budapest 57% 13% 7% 23%Cairo 66% 11% 4% 19%

Dubai 59% 11% 7% 23%Dublin 67% 15% 5% 13%Istanbul 42% 27% 4% 27%Johannesburg 45% 20% 3% 32%Lisbon 47% 18% 4% 31%London 66% 10% 5% 19%Luxembourg 59% 15% 7% 19%Madrid 55% 17% 3% 25%Milan 59% 16% 5% 20%Moscow 56% 22% 3% 19%Paris 62% 17% 6% 15%Prague 56% 19% 1% 24%

Casablanca 54% 21% 2% 23%

Riyadh 56% 12% 9% 23%Warsaw 61% 16% 5% 18%EMEA 58% 17% 5% 20%

there also exists higher wages in other areas of work due to the aforementioned reasons. There is also an observed domino effect, where often some Western countries have traditionally looked east to tap into a less expensive workforce. Now many Eastern European countries find themselves strapped for readily available labour and have had to also look to untapped markets. This problem is often compounded seasonally as well. In Poland, contingency is now being factored into pricing given the shortage of readily available labour.

• In Dublin, there are too few contractors to take on the demand of the local office leasing market. Labour is increasingly a problem and compounded by an ongoing housing shortage – again marked by demand far outpacing supply.

Logistics and Fees• Logistics and shipping are an additional factor which

contributes to fit-out costs. Some materials need to be sourced from other countries or other regions and in doing so shipping costs are directly passed onto pricing. This is especially noticeable in South Africa where materials or furniture often are sourced from Europe or even the United States. Imported materials can have a 30-40% premium on costs and similarly customs often contribute to pricing.

• Lastly, professional fees (design, project management, cost management etc.) vary country-to-country. Relatedly, some do not offer similar mark-ups on pricings that would be standard in other markets. Pending the local market practice, the fees may be passed along to the landlord rather than the occupier.

MethodologyJLL’s EMEA Project & Development Services & Tétris teams worked together to benchmark a single office fit-out across 22 markets in the region. Each individual team was given the floorplate and general assumptions for the JLL Amsterdam office as a basis. Each team was supplied with a pricing schedule broken into over 20 ‘chapters’ individually itemised for consistency. Furthermore, each team received a complete joinery list, a complete AV list and a complete list of furniture.

In each chapter, each local team was asked to price what their suppliers would charge if the project had taken place locally in their local currency.

One central, regional team collated all of the data and worked alongside local teams removing any ambiguity in the delivery. The central team then reviewed, analysed, and compared market-to-market. Prices were then exchanged to a Euro standard and normalised based on an exhaustive benchmarking analysis to account for local market variances.

*This includes limited design fees.


Final figures were validated with the local market teams. The regional average therefore is unweighted and acts as a pure average. This exercise acts as a benchmark for cost comparisons.

The Priced Scheme

Project Delivery• JLL Amsterdam office used as template designed and built

by Tétris, JLL’s wholly owned subsidiary that operate in 14 EMEA countries

• All fees relating to design, cost management and project management are included

• Six-month design and construction schedule

• All work undertaken as a single contract and within normal working hours

Pricing Assumptions• Fit-out price locally based on the assumptions below;

• The building is a new build, well-located in the CBD; BREEAM rating: Very Good

• The office building is equipped with earthing installation, climate systems, fire protection installation, sprinkler systems, and security systems. Alterations were made and incorporated into the budget to match the desired layout of the floorplan.

• Computer floor also integrated beforehand.

• All prices are inclusive of mark-ups

• Fit-out quality is of international corporate standard

• The base date for pricing information is Q1 2019. Exchange rates from Q1 2019 have been applied to the cost data to present it in Euros throughout.

• Foreign exchange rates always pose a challenge for comparative analysis. When using this report please therefore be conscious of the fluctuating foreign exchange rates as this can have an impact on relative costs.

As part of the evolution of the modern office, the design offers: closed-conference rooms, eye-to-eye space, open “wander-around-space” and open meeting space stimulation.

The ‘City Within’ was designed to accommodate employees, designed with the Human Experience in mind. Like in a city, the office consists of several neighbourhoods and places for various activities. Areas in a city such as the business district, food district or just a park for relaxation have been translated into the office design.

Key Features• 2 floors, with interior staircase between floors

• ‘Neighbourhoods’ layout with distinct features to each including a game/chill room and prayer/meditation room

• Activity-based working

• 140 flexible desks for all users – reliant on an 80% flex rate – 8 desks for every 10 employees

• Purpose-built rooms

• Highly customised – curved corners on walls and the entire interior; a reliance on joinery in place of furniture

• Multi-purpose catered lunch café with ability to hold conferences and large meetings

Technology-enabled• Room booking system based on activity rather than need

• Large curved screens and TVs throughout

Client-facing space• Reception area with front-of-house staff

• Meeting rooms of multiple sizes; one including a false fire place

Lifestyle• Billiards table

• Built-in putting green

• Catered cafe area

8th floor 9th floor


Bringing your fit-out projects to life

Our network of project and construction managers, space planners, designers and cost managers understand your

business objectives and brand ambitions. Our aim, using this knowledge, is

to deliver outcomes that transform your workspaces, enabling your

teams to collaborate, improve their productivity and do their best work.

That is how we


Transforming the places where you workWe operate in more than 80 countries worldwide and hold our supplier network to the same high standards of delivery. Wherever you operate you can take comfort in knowing that we enhance your reputation and minimise risk.

2

Dublin

Madrid

Moscow

Milan

Budapest

Munich

Prague

WarsawHamburg

Berlin

Frankfurt

Düsseldorf

Amsterdam

RomeIstanbul

Bucharest

Paris

Cologne

Geneva

EdinburghGlasgow

Leeds

Birmingham Manchester

London

Bristol Cardiff

Exeter

Nottingham

Southampton

Bratislava

Wroclaw

Marseille

Luxemburg

Stockholm

Brussels

Lyon

Lisbon

Dresden

Barcelona

Helsinki

Eindhoven

Lille

Rotterdam

Zurich

Gdansk

Cracow

Project management office

Tétris* turnkey interior fit-out office

Africa

CairoCasablanca

Johannesburg

* Tétris is a wholly owned JLL Subsidiary

Middle East

Dubai

Abu Dhabi

Jeddah

Riyadh


Contacts

Bernard Tyler Christina Sigliano Tracey ByerChief Operating Officer

EMEA Project & Development Services and Tétris

+44 (0)207 852 [email protected]

Director EMEA Corporate Solutions


Head of Client Development, Tétris EMEA


Ryan Loftus Kesh PrabhakarEMEA Corporate

Research Associate


Director Cost Management


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About JLLJLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 91,000 as of March 31, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com

About JLL ResearchJLL’s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 400 global research professionals track and analyse economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.

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