Office fit-outs must help firms attract and retain talent – even if that costs clients more

By Chris Wheal

August 06, 2024

In Dublin, the average cost of a high-spec fit out is £2,312 (€2,663) per m2 . In London it I s £3,072 (€3,539)

Business consultant Turner & Townsend has warned that fit-out and refurbishment of office space has become increasingly complex for clients. Fit-out firms that can help clients understand and meet these challenges could have an edge.

In a web posting entitled Key drivers for Europe's workplace strategy shift, the company said: “Talent, sustainability and cost must all be factored into workspace decision-making across Europe and beyond.”

The blog post said: “The cost pressures on corporate occupier fit-out projects persist, with prices remaining elevated following the market disruption of recent years. The picture, however, is nuanced. Project costs are beginning to stabilise due to the impact of slowing inflation on input costs and higher interest rates constraining demand.”

London and Dublin 

The blog focused on key European markets, but Jayson Crosley, director of Turner & Townsend alinea, spoke exclusively to FitOutNews. He outlined the impact on the UK and Irish markets.

“As businesses work to attract employees back to the office with productive, comfortable and appealing spaces, real estate clients in the UK and Ireland, as elsewhere in Europe, are having to play a careful balancing act between the push for premium and maintaining cost efficiency. 

“This challenge is reflected most clearly in London, where companies continue to invest in flagship headquarters. A shortage of the specialist skills needed to deliver the pipeline of high-specification fit outs is contributing to an average cost of £3,072 (€3,539) per m2 for a premium office,” Crossley said.

“Similar cost pressures are being felt in Dublin, though the average cost of a high-spec fit out at £2,312 (€2,663) per m2 is significantly lower than in London,” Crossley added. “Growth in professional services in the Irish capital is helping to drive strong demand for quality offices, while skilled labour shortages and a high cost of living in and around the city are pushing up wages.”

High bar for fit-out

In the blog, the Turner & Townsend consultants examine factors across Europe. They said that in Munich, the prestigious engineering at the Technical University of Munich made the city a ‘go-to’ for major tech players, and this set a high bar for office fit-out. It said grade A workplaces come in at €2,700 per m2, compared with €2,160 per m2 for a medium-specification fit-out in the same market. 

“In Paris, high-specification fit-outs compete with the luxury retail brands and top-end hotels of the Champs Elysee and beyond, driving up average costs per m2 to nearly €1,000 more than an equivalent mid-range office,” the blog revealed.

It’s the little things that make the difference. But they are not little in price. “Modern workers want a healthy range of amenities that may include collaborative working areas, social spaces, state-of-the-art technology, bicycle racks or on-site showers, but this all comes at a cost. 

“For example, in Munich, the price of a coffee or tea point in a high-specification fit-out sits at €3,610 per m2 – compared with a more standard open plan office, which, in the same class of fit-out, will cost €1,860 per m2,” the company said.

Sustainability standards

Another factor driving decision-making is sustainability. “Young talent increasingly identifies with employers who have a strong purpose aligned to social and green values,” the blog post claimed. That is pushing firms towards the available sustainability standards for offices. 

“Companies continue to explore life-cycle assessments and strategies to improve energy efficiency both from an operational and embodied carbon lens. Part of this has seen a move towards gaining Building Research Establishment Environmental Assessment Methodology (BREEAM), Leadership in Energy and Environmental Design (LEED), or similar accreditations, as major corporates look to meet the new European Sustainability Reporting Standards (ESRS) linked to green finance and ESG investing. We saw this recently in supporting Pinsent Masons on their BREEAM and WELL certified 1,350m2 fit-out in the Crossover building in Amsterdam, taken as part of a green lease,” the post said.

It also suggested this meant focusing on a main office and possibly closing satellite offices as people worked from home.

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