Cost of materials and specialist skills driving up prices as occupiers focus on quality

The cost of fitting out high specification commercial space in London is higher than anywhere else in the world, according to Turner & Townsend.

A new report from the consultant found the average high specification project cost in the capital was £4,671 per sq m. It was followed by New York (£4,470), Zurich (£4,299) and San Francisco (£4,293).

T&T blamed high material costs, specialist skill shortages and a race for quality workspaces for driving prices up on the Thames.

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BW completed the fit out of Virgin Media O2’s new London headquarters in Paddington. Each of the six floors reflects the range of services offered by the telecoms firm and includes over 350 individual finishes and 75 light fitting types

Its data identified demand for quality services, with occupiers seeking up-to-date audio-visual technology, as well as premium mechanical, engineering and plumbing.

Fees for specialist skills in these areas in London are almost double their equivalent in New York.

Increased building safety regulations and an ongoing shortage of chartered fire engineers was also cited as driving the cost spike, specifically in high rises.

Nadia de Klerk, global head of occupier and retail at T&T, said: “In London we are seeing a perfect storm. The gathering pace of return to office working, coupled with skilled trades shortages and high building material prices, have resulted in commercial fit-out costs being the world’s most expensive.

“The knock-on effect in the push for premium fit-out space is creating even greater demand for specialist skills, from MEP and sustainability to digital expertise, and this is likely to keep costs high.”

The biggest fit out job let in London last year is set to start soon with Overbury carrying out work on a £250m scheme for HSBC’s new head office at 81 Newgate Street in St Paul’s which has been built by Mace.