The average office fit-out costs have increased by around 15-20% during the past 12 months, but they still remain among the lowest in the Central and Eastern Europe (CEE), according to data from the Cushman & Wakefield Echinox real estate consultancy company. With an average level of €943 per sq. m of office space, the cost in Bucharest is 32% below those in Warsaw and Prague and 25% above the average cost registered in Sofia, the less expansive market in the region.
Andrei Ianculescu, head of project management Cushman & Wakefield Echinox: „Although the prices of raw materials have not increased significantly during the past year, the finished goods which involve labor force, utilities and transportation continued to be on an upward trend, as labor, material and equipment costs have the biggest impact on office fit-out prices. Moreover, the average net monthly income in Romania increased by more than 15% during 2023. It is also important to note the budget allocated for implementing ESG standards, as it is a growing concern among tenants”.
The budgets can range from €700 to more than €1,400/ sq. m depending on the project complexity, the materials and the solutions used, but also on the technical and security systems which have been implemented. The costs related to fit-out works, architecture and installations (51%) and those pertaining to furniture (30%) have the largest shares in the total cost, while also being the ones most impacted by the price increases. Audio-video (AV) and IT systems, as well as project management and design services, are the other major components of any office fit-out project.
Another factor which has affected the office fit-out costs is related to legislative changes, which impose new regulations in the field, as we can mention here the obligation to have a fire detection system in the floor, but also the need for quality and visual impact, as well as alligning to the employees’ expectations.
The project management services involve the management, coordination and supervision of fit-out projects (office, retail, residential, mixed-use, industrial and logistics) together with the design team, consultants and entrepreneurs for all the main stages of the project.
The Cushman & Wakefield Echinox Project Management Department has carried out projects with a total area of 300,000 sq. m of office, retail, industrial and logistics spaces over the last two years, both for landlords and tenants. The completed office projects involved a budget of around €30 million, while the largest assignment carried out in terms of the incurred budget accounted for more than €5 million.
The fit-out cost pressure is due to ease in line with the softening inflation, but the wider environment is being complicated by the overall geo-political uncertainty, as the costs in question will continue to increase, albeit at a lower pace.
Companies are willing to allocate increasing budgets for their office fit-outs, as the adoption of flexible work models requires the refitting of offices and investment in technology systems. Additionally, meeting ESG standards often involves higher initial costs, but these expenses are recovered through the creation of energy-efficient offices with reduced environmental impact.
