However, according to a report by Cushman & Wakefield, the office sector continues to face significant uncertainties, driven by new tariffs imposed by the U.S. on imports from major trading partners such as Canada and Mexico.
Rising labor costs and prices for essential commodities like timber, steel, copper, and cement are expected to persist into 2025, analysts warn.
"While we are seeing a slowdown in construction costs, there are still considerable challenges and uncertainty surrounding the impact of tariffs and the ongoing labor shortage in the construction industry," said Brian Ungles, President of Project & Development Services, Americas.
"Our research indicates that permitting delays will remain a key issue, leading to project postponements and further increasing uncertainty," the report emphasizes.
The rate of construction for new office spaces has decreased by 40% year-over-year (YOY) in the U.S. This reduction in new office deliveries means that users may need to turn to upgrading and refurbishing their existing office spaces due to the limited availability of new developments.
"Although the construction of new office spaces has slowed, the overall cost of construction will continue to rise as activity in refurbishing existing offices intensifies, and new developments in other real estate sectors remain strong. This increases competition for construction materials and labor," said Richard Jantz, Tri-State Lead, Project & Development Services.
To accommodate users requesting office refurbishments, office space owners have increased their contributions to tenant improvements for Class A buildings by 7% year-over-year, with some markets seeing increases of up to 20% annually.
Cushman & Wakefield's 2025 Cost Guide for Office Tenants in the U.S. provides insights for 58 markets, offering tenants better support for improving relocation investment planning and budgeting. A comprehensive section includes current costs for architectural work, carpentry, doors, windows, drywall, suspended ceilings, mechanical, plumbing, fire protection, electrical installations, and more.
As an innovation for 2025, a new process has been added to calculate all-in costs, including low-voltage wiring, audiovisual equipment, security, furniture, fixtures and equipment (FF&E), and soft costs. The report also explores key findings, providing an overview of current construction conditions and a detailed analysis of the office sector.
