Economising fit-out at all costs?

FM newsroom – office, fit-out. Employers want to bring employees back to the office while optimising costs. However, implementing adaptation to hybrid working, sustainability, and inclusion – despite being the biggest office trends – can be challenging, especially in the current macroeconomic situation. 

Office fit-out budgets are impacted by macroeconomics. After the rollercoaster of change in recent years, the second half of 2023 brought a long-awaited stabilisation of energy and building materials prices. Key cost drivers now include supply chain disruptions, elevated labour and transport costs, and high inflation – Property Forum writes, referring to Cushman & Wakefield’s analysis.

A change in mindset

Cushman & Wakefield analysed average office fit-out costs in 43 key cities across EMEA to provide an all-in section, including fit-out, furniture and IT systems, and professional services. For instance, in Warsaw, these account for 63%, 15%, 12%, and 10%, respectively. By comparison, in Budapest, furniture costs are 10% higher, but professional services make up only 6%. In Hamburg, furniture and IT account for a large proportion of all-in costs, leading to a greater focus on economising fit-out.

According to the report, medium-quality fit-outs in Warsaw are priced at an average all-in rate of €1,250 per sqm – almost the same as in Prague or Budapest but half of what average fit-out costs are in London and Hamburg.

“Due to economic instability, optimising expenditure budgets has become fundamental to sound management. The need to evolve and innovate has not diminished – on the contrary, many processes have accelerated. Having set ambitious social and environmental targets, companies are testing various modes of working while at the same time fostering inclusion and diversity. The office is central to many of these transformative processes, with increasing focus on its quality” – says Andrew Frizell, Head of Project & Development Services, Cushman & Wakefield

According to Cushman & Wakefield’s survey, 65% of employees said that the office was a place for human connection. Almost equally important were its uses as a place for focused work and maintaining energy. According to approximately 50% of respondents, other benefits included work-life balance and well-being. In addition, the office still provides better access to tools and resources for some employees. These factors necessitate a change in mindset towards the office fit-out and overall workplace experience.

“In office design, a greater proportion of space is being devoted to employee well-being and supporting individual needs. Environmental psychology, neurodiversity and inclusivity are becoming increasingly important in office design, reflecting growing expectations of the workplace” – Mariola Bitner, Head of Workplace Strategy, Cushman & Wakefield

Sustainability gaining momentum

Science Based Targets Initiative (SBTI) maintains a database of over 7,000 companies taking action on climate change. Within that dataset, 99% of those that have set Net Zero targets have done so since 2022. In addition, real estate companies are increasingly applying for globally recognised accreditations such as BREEAM, LEED, WELL and Fitwel.

Multi-criteria certification systems go beyond reducing emissions. A building’s sustainability credentials, which are measured during the certification process, are also impacted by its effect on the health and well-being of its users and on the local urban and social fabric.

“Efficient and sustainable buildings significantly support tenants in achieving the environmental and social goals of their ESG agenda. That’s why landlords and managers are also intensifying efforts to meet the requirements of building users in addition to trying to achieve their own strategic corporate goals. This creates the opportunity to create a partnership that can include the use of technologies supporting data collection, sharing and analysis, the adoption of green leases and upgrades. Energy efficiency, water conservation and other such solutions also allow for optimising operating costs for all the parties,” – explains Katarzyna Lipka, Head of Strategic Consulting and ESG, Cushman & Wakefield Poland

Optimisation at all costs?

Rising material costs and professional services pressure the need for optimisation. However, it is not advisable to skimp on energy-saving technologies, quality and durable materials, or solutions that provide a long-term user experience. Such investments not only bring instant benefits but also result in savings and efficiency in the long term.

Given the importance of sound cost management, there is a growing demand for high-quality spaces. Tenants, however, are opting for smaller offices. This trend is expected to feed into an increased flight to quality in fit-out contractor hiring. 


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