This article is from the Australian Property Journal archive
INFLATION, tight labour markets, and supply chain disruption have pushed average fit-out costs in Australia up by 16% in the past 12 months, with offices in the national capital the most expensive.
Cushman & Wakefield’s 2023 Project & Development Services Fit Out Guide shows the average fit-out cost of an office in Canberra is $2,592 per sqm, putting it well ahead of Sydney with costs of $2,304 per sqm.
Melbourne and Brisbane followed with $2,253 and $2,203 per sqm, respectively, with Adelaide and Perth equally the most affordable to fit out on $2,119 per sqm.
Not only was Canberra the country’s most expensive city, but it also ranked fourth among all major cities across the Asia Pacific region behind Japanese trio Tokyo, Osaka and Nagoya.
Also in the top ten across the region Sydney and Melbourne, at seventh and eighth, as well as Seoul, Auckland, Busan and Hong Kong.
Brisbane, Adelaide and Perth were all next, ahead of Singapore and Beijing.
Asia Pacific head of insight and analysis, Dominic Brown, said that while fit-out costs were up substantially in Australia, organisations are absorbing the cost to keep pace with post-pandemic expectations.
“The fitting-out of office space has moved well beyond aesthetics, and amid the adoption of hybrid work models, how space contributes to a company’s financial, social, and sustainability goals is more important than ever,” Brown said.
Cushman & Wakefield’s APAC head of project and development services business, Tom Gibson, said the conversation with occupiers remained focused on the changing working environment.
“Occupiers are increasingly wanting to create destination offices for their employees.
“‘Destination’ means different things to different companies – it could be creating a hospitality feel, or more social spaces – but ultimately, it is about creating a ‘stickiness’ that makes people want to come to work.”
The most expensive work spaces to fit-out by some way are “advanced hybrid” workspaces. Cushman & Wakefield classifies these as the “post-pandemic destination office with more than 50% non-assigned workstations and work-points”, and featuring heavily tech-enabled spaces with frictionless audio-visual connectivity, support functions that include multi-functional break-out areas, a variety of meeting rooms, dispersed collaborative spaces augmented with specialist lifestyle elements such as library, focus and relaxation zones, and client-facing areas that have a “hospitality look and feel”.
In Canberra, an advanced hybrid workspace would cost US$272 per sq ft, compared to $164 per sq ft for a collaborative hybrid workspace and $91 per sq ft for a basic hybrid workspace.
A collaborative workspace is a mixture of one-to-one assigned workstations with zones of non-assigned workpoints, support functions that include an expanded break-out area, a variety of meeting rooms, and dispersed collaborative spaces, and more than 50% of space allocated to dedicated workstations.
Basic hybrid workspaces are closer to “traditional” office spaces. One-to-one assigned workstations are supplemented with additional spaces for group work, and support functions are limited to a basic pantry area, generic meeting rooms and limited drop-in collaborative spaces.
Cushman & Wakefield’s head of project and development services, Australia, Mitch Wilson said that demand from occupiers remains high, particularly as organisations upgrade space or relocate to strive for sustainability targets.
JLL data shows office net absorption across Australia was 32,100 sqm in the December quarter and 95,000 over the 2022 calendar year.
“We are seeing continued focus on sustainable outcomes incorporated in fit-outs inclusive of sustainably sourced materials, supply chains and ongoing energy reporting. Occupier clients are particularly drawn to sustainable buildings that already have high-end credentials in sustainable practices,” Wilson said.
