GLOBAL OVERVIEW
Office demand is back – and occupiers are raising the bar
Six years on from the start of the global pandemic, we might like to imagine that its wounds have largely healed. Yet the impact on the world of business is enduring.
Some signs are obvious. Flexible working and changing expectations from employees are unlikely to ever fully reverse. Looking under the surface, though, there is a substantial challenge beginning to show itself – namely a lack of new, high-grade office space in many major hubs.
Occupiers from major global players in financial, professional and legal services, to tech behemoths and start-ups are all competing in an international market for talent and investment. They must have top-quality office space which reflects their brand and ambition – but stock is running short.
Crunch time
The long lead-in times of development mean that we’re currently at the start of an increasing crunch when it comes to premium office availability. Even a few years of paused development, with a sluggish return to normal, can have an outsized effect.
So, while businesses have bounced back, and are growing fast in many global regions, the space for them to grow into is, in some markets, at an all-time low.
Feeling the squeeze
The Grade A capacity squeeze has intersected with a new world of heightened occupier demand and expectations. Employees and clients are back in the office more, if not most, of the week – cutting across many occupiers’ previous models of desk oversubscription, requiring a switch from floorspace compression back to expansion to accommodate full-time office working. This return to the office can only be sustained through employer investment in high-quality spaces that directly compete or even surpass the benefits of home working.
We’re seeing high-value requirements for amenities, welfare, and highly scored building standards in connectivity and sustainability – all contributing to ever-rising high-spec fit-out costs.
Workforce sizes have increased in many companies in recent years, yet space-take has largely remained the same, meaning employees themselves are feeling squeezed as current offices are outgrown and desk capacity runs short.
While businesses have bounced back, and are growing fast in many global regions, the space for them to grow into is, in some markets, at an all-time low.
Decision point
Traditionally, this would mean moving within market to a bigger, better space – securing or building a bespoke office to meet the occupier’s new requirements. Now, both the demand for and cost of limited Grade-A space may be prohibitive. This means refurbishment has risen up the agenda, as has the option of moving out of the CBD, or outside of market to other nearby hubs with more ample capacity.
All options come with their own challenges. Upgrading existing space may sound the simpler solution, but often in situ renovation comes with disruptions to business operations. Not to mention that in this new, digitally enabled world, where AI is transforming expectations of integrated technology, the ideal refurbished space may come with significant costs beyond just the tricky logistical considerations.
Finding balance
Not all markets are experiencing the acute Grade-A shortages seen in locations like London and New York. In some cities, vacancy rates are still hovering above pre-pandemic levels. These may offer opportunities for expansion and better value, due to reduced competition, as occupiers look to balance their portfolios and find headroom.
A crucial juncture
This sets the context for our 2026 global occupier fit-out report. Our data and insight are presented to help decision-makers at this crucial juncture. Talent is mobile, and so are businesses, so being able to compare and contrast global fit-out costs is increasingly essential for portfolio planning.
The outlook, behind all the complexity and uncertainty, is positive. Growth finds a way – and businesses are innovating to get the spaces they need in the real estate available, while exploring new ways of minimising costs without compromising on quality.
Availability pressure is expected to ease by 2030, in many major markets, as new stock comes onstream. By then, though, the sector will likely have reimagined again how to approach fit outs, and will be all the stronger for it.
VALUE
Global fit-out cost ranking for 2026
Our 2026 global fit-out costs illustrate the move occupiers are making up the value chain. Across the world, they are looking for ways to impress. An office now fundamentally needs to be more than just a place to work, it must be a home from home, a place to eat and drink, socialise, innovate, and bring people together. Expectations have risen – and so have costs.
To provide a global comparison, we have developed a constant currency view looking at how high-specification costs compare across the world. Our methodology for this approach is here.
Taking this view, New York ranks as the most expensive market globally for high-specification fit out, with London coming in a close second. Both cities continue to be favoured by global corporates looking to deliver flagship space in dominant talent hubs.
Across the world, occupiers are looking for ways to impress - expectations have risen, and so have costs.
The top ten is closely balanced in terms of major locations for fit out in the US and Europe. You’ll find further insights into these cities in our spotlights. Buenos Aires is an outlier due to the hyperinflationary environment, which is distorting costs.
LANDSCAPE
Costs across regions
In this report, we analyse the high-level trends we’re seeing in fit out across the super-regions of the globe, and how these are impacting the construction costs for projects in key markets.
Aside from evolving occupier demand, foreign exchange rates have also played a bigger role this year, with more volatile than usual currency movements relative to the US dollar. For more detail on how this has been accounted for in our analysis, see our methodology.
In this chart, we show the average costs per region across the three specifications covered and take a constant currency view to mitigate any FX distortion.
Overall, Europe and North America show similar average costs at high specification. Asia is significantly lower on average, reflecting the large number of emerging-market cities in the sample, though individual Asian cities like Tokyo rival costs in Western markets. Explore data and findings for our super-regions: EMEA, the Americas and Asia-Pacific.
SHIFTS
Spotlight city cost movements
With currency fluctuations stripped out, Munich (+19.6%), São Paulo (+19.0%) and Bangalore (+11.6%) saw the steepest real increases year-on-year. All three markets are seeing buoyant demand for fit out from different sources, which we explore in our spotlights. Hong Kong (-11.0%) and Zurich (-5.9%) saw average costs of fit outs fall reflecting a stabilising cost landscape for material supply.
TRANSITION
Exploring move costs
As businesses continue to evolve their workplace strategies, the costs associated with moving have become a much larger proportion of overall fit‑out expenditure across EMEA, APAC and the Americas.
Modern relocations extend well beyond the physical movement of people and equipment; they now involve detailed IT migration, business‑readiness activities, phased sequencing, commissioning, and the integration of hybrid‑working technologies. They also require careful planning for the sustainable disposal or reuse of redundant furniture, fixtures and electrical equipment, whether the space is being prepared for new construction or a full exit.
Global inflation, fluctuating labour availability, supply‑chain challenges and increasing expectations around digital infrastructure have all driven move, clearance and reinstatement costs upward and made them more unpredictable.
In response, occupiers are placing greater focus on early planning, comprehensive audits of furniture, fixtures and equipment, robust risk management and achieving cost certainty to support smooth transitions into new premises and environmentally responsible clearances, while keeping business disruption to a minimum. Explore move costs across EMEA, the Americas and Asia-Pacific for regional data, market context and local cost considerations.
REINSTATEMENT
Understanding reinstatement and dilapidations obligations
Fit-out costs do not always end at practical completion. At lease expiry, break, assignment or surrender, tenants may be required to remove all or part of their fit-out, together with complying with wider lease-end obligations. These liabilities are commonly referred to as reinstatement or dilapidations and can represent a material cost exposure. It is therefore important for occupiers to understand local market practices relating to reinstatement and dilapidation obligations.
To assist, we have provided an indicative overview in the table below. This is intended only as general guidance: dilapidations remains fundamentally contractual, and actual tenant obligations will always depend on the specific terms agreed. As such, the information provided should not be treated as definitive, and all leases must be reviewed to confirm the true position.
Reinstatement or dilapidations liabilities can vary significantly depending on the size and condition of the premises, asset class, age, the extent of alterations, local statutory requirements, market practice, and the specific lease obligations. These variables mean that broad cost averages can be misleading when applied to individual assets or portfolios. These liabilities also have financial reporting implications. Accounting standards such as IFRS and GAAP mandate the recognition of a provision for these liabilities. The expectation is that provisions reflect the best estimate of the expenditure required to settle the obligation. Where possible, accurate calculations based on the specific obligation are generally preferred over broad assumptions. This demonstrates the need for occupiers to obtain an accurate assessment of potential reinstatement / dilapidations exposure.
Historically, approaches to dilapidations and reinstatement have varied significantly by country. Some markets follow established processes, surveyor-led negotiations and legal precedent, while others have traditionally relied on more informal, principal-to-principal discussions between landlord and tenant. We are, however, seeing a shift in several markets towards more formalised claims, more adversarial negotiations and, in some cases, increased litigation. This trend reinforces the importance of understanding lease obligations early and planning for exit well before lease end.
Early assessment and strategic planning is therefore essential. CBRE T&T can support occupiers with provisioning and liability forecasting, and at lease end, through landlord engagement and negotiations, exit strategy and settlement/works delivery.
For more information, please contact Rhiannon Goldsborough at Rhiannon.Goldsborough@cbre.com
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