“The Covid-19 pandemic posed a real challenge for the entire construction sector. However, in EMEA region it has remained resilient, and after an  initial slowdown companies have returned to a reasonable level of profits. Despite the increased investor activity, the uncertainty related to the return of employees to offices is still noticeable on the market due to the implementation of the hybrid workplace model and  focus on savings on occupancy and office fit-out costs. The war in Ukraine, tightening supply chains and the challenges of construction materials availability have directly led to upward pressure on fit-out costs per square metre this year. However, despite this challenging economic situation, thanks to our team of experienced professionals, we are successfully executing a number of projects. We expertly assess risks and support our clients in effective budget planning and management.” comments Bogumiła Kompowska, Associate, Design & Build Lead, Project & Development Services, Cushman & Wakefield.

Economic recovery is underway…

Despite optimism in the outlook for Central and Eastern Europe, there are some near-term challenges and issues impacting supply chains, especially for products supplied from APAC, and directly from Ukraine. As the COVID-19 pandemic eases, we are likely to see improvements, but demand is currently outstripping supply in some areas. 

…but pressure on costs remains

Throughout the early phases of the pandemic the cost of office fit-out works remained competitive. However, due to soaring inflation and the conflict in Ukraine, office fit-out costs have risen sharply due to the increasing cost of material and labour. As a consequence, contractors are reviewing their project pipeline and factoring in larger ‘risk’ allowances.

Poland claims a podium finish in CEE

In the list of top seven CEE capitals in the C&W “EMEA Fit-Out Cost Guide”, Poland came third for office fit-out costs with an average of €1,010 per sqm.

The C&W EMEA Fit-Out Cost Guide provides an all-in section to include furniture, fit-out, audio visual and IT systems, and professional services, accounting in Warsaw for 15%, 63%, 12% and 10%, respectively.

New, flexible working models

As the COVID-19 pandemic eases, companies are increasingly concentrating on office reconfiguration and preparation for the return of employees. The last two years have transformed the approach to creating a user-friendly and multifunctional office, with greater focus on flexibility. A reduction in the number of assigned desks and  provision of smaller and larger meeting spaces, and break-out space, has also been an observed trend. In the event of planned changes, it is vital that companies carefully consider costs and allow sufficient capex to cover the investment.

With buildings responsible for around 40% of global CO2 emissions, sustainability is becoming ever more important in office fit-out design and usage. This includes the embodied carbon which comes from the built-in materials and the operational carbon generated through the operation of the facility.

Office fit-out costs in a nutshell

What are office fit-out and work organisation cost drivers? They include more focused workplaces with a move away from traditional desk layouts resulting in higher costs per square metre, as well as increased investment in audio visual systems and technology. Other cost drivers comprise workplace solutions that provide flexibility such as modern furniture including pods and booths, and certified sustainability and employee wellbeing standards.

“Despite the turbulence of the last few years, the office is very much alive and, in our opinion, will continue to serve as a work, meet and social hub for corporate occupiers. Office design will evolve, and sustainable solutions and materials will become mainstream. For anyone planning a new office fit-out project, or embarking on refurbishment of an existing office, our EMEA Fit-Out Cost Guide can provide valuable insight into the likely costs based on real data from our own completed projects” comments Andrew Frizell, International Partner, Head of Project & Development Services, Cushman & Wakefield.