Office Fit Out Price Increases Explained
What’s been happening with price rises in design and office fit outs in Perth over the last 3 years?
There have been plenty of changes in recent years within the office environment. And these changes have effected the way office fit outs are completed. With this blog we’ll look at changing work dynamics and evolving trends. What we really want to look at and answer today is:
How much have prices risen in office design and fit out and how does this compare to the residential construction industry in Perth, Western Australia?
Have clients in Perth been accepting of these price rises, and are office fit out prices going to continue to increase?
What specific areas in office design and fit out in Perth have seen price rises?
How can Bellfort help you navigate the price rises in Perth’s office design and fit out?
One of the primary drivers of rising prices in the office fit out industry in Perth, is the escalating cost of materials. Increased demand, exchange rate, manufacturing, and importation costs have all played a role in driving up the cost of fit out materials.
The biggest increases, we have seen in materials for fit out are:
– 62% in electrical cable
– 39% in copper pipe
– 35% in aluminium
– 33% in glazing
– 30% in furniture
– 28% in plasterboard
– 25% in flooring
– 22% in mechanical ductwork
– 18% in paint
– 12% in lighting
The Perth labour market has been all over the place the last few years. With the massive drive in residential construction and COVID causing offices to be abandoned (and landlords not wanting to spend any money), some of the fit out contractors have moved from commercial into residential. We are now starting to see them come back into office fit outs as the residential sector starts to return to some normality.
The biggest increases, we have seen in labour for fit out are:
– 22% for carpenters, partitioners and ceiling fixers
– 18% for electricians and HVAC services
– 15% for painters
– 12% for furniture installers
COVID initially created a change in the office environment specifically regarding social distancing. This resulted in some cost savings in terms of the office layout, because spreading out the office meant less dollars needed to be spent in the same area. In saying that, office furniture suppliers and manufacturers quickly jumped on the COVID germ bandwagon and created products such as antimicrobial desk-tops check out Laminex Protec Plus.
Now, with attempts to lure staff back to the office, there has been a change in office design in terms of designing spaces to make the office more attractive for staff to return. With labour shortages in every industry, its now about staff retention and making the work environment as attractive as possible. Designing different work zones that cater for those working full time or just wanting to pop in for a few days or hours per week. Kitchens with coffee machines and even trained baristas, relaxed meeting areas, plug and play desks, and the good old end of trip facilities for the lycra club.
Its not easy to put a percentage increase on design complexity but what can be said is that overall, landlords and tenants are needing to invest more to lease spaces and get staff back to the office.
The push for green offices has been going for some years. The incorporation of eco-friendly materials and energy-efficient systems within office fit outs will always continue. As an example, we are now installing LED lighting in most landlord upgrades. Luckily, price increases in this area have been modest because the supply cost of LED lighting has dropped overall in the last few years.
Building permit costs for office fits outs have continued to increase.
Local authorities continually come up with new ways to add a little more to their fees. One local authority for a Building Permit application recently added $210 for a ‘Development Inspection Fee’ and a $3,000 bond. They stated this was to inspect and protect the council assets including ‘footpaths, kerbs, roads, drainage systems, street lighting, signage, road markings, street trees and reticulation adjacent to the development’.
“I have to ask, how are these charges relevant and justified for an internal office fit out?”
Another large council cost increase is landfill disposal, which have risen by 40-65%. The cost rise is put down to regulatory EPA (Environmental Protection Authority), recycling, labour, and fuel cost increases.
How much overall have the prices risen in office design and fitout and how does this compare to the residential construction industry in Perth, Western Australia?
We estimate the overall price increases for design and office fit out in Perth in the last 3 years is: 26.5%
I recently attended a property event and Jay Walter from residential construction company JWH Group confirmed they had seen price rises of: 43%
So, what is the reason for the difference in price increases?
The answer is likely demand. Residential markets have seen a huge increase in demand in the last 3 years, partly associated with government grants.
Over the same time, offices were virtually abandoned and while we are now seeing that market return, it is a slow process.
One thought to also consider (and one that many have forgotten), is that prior to the recent increases, both the commercial and residential construction industry didn’t see many prices rises for 3-5 years.
Have clients in Perth been accepting of the price rises, and will they continue to go up?
Just like shopping costs going up, tenants in Perth have had to be accepting of prices rises. Tenants are also recognising they now need to invest money in their offices to attract and retain staff.
The days of squashing staff into small spaces and whipping them are well gone!
Most landlords have always been prudent, and it has been a struggle for many years to persuade landlords to invest in their properties. With new offices being built in the CBD offering a very high standard of quality space and facilities, the landlords with lower grade buildings are really needing to up their game.
“In our view, prices in office design and fit outs in Perth are going to continue to increase. However, they will be modest compared to the last 3 years and follow close to the current inflation rate.”
Its pretty simple, just call us on 0488-030767 or email firstname.lastname@example.org
We look at all elements of the design and work out clever ways to cost effectively design a space. Our construction team have been delivering office fits outs for nearly 20 years and our long term relationships with suppliers and contractors allows us to provide the best and most effective fit out solution.
We are still delivering office fit outs in Perth from $700 per m2, see what’s included in this cost at How Much Does Fitout Cost.