How Much Does It Cost to Build Out Office Space?

Building Out Office Space: Planning for Costs Early

So, how much does it cost to build out office space? The answer varies, but typical office buildouts range from $50 to $250 per square foot, depending on the level of customization, materials, and location.

One of the biggest challenges when searching for office space is managing the costs of building out the suite, furnishing it, and moving in. While many tenants start budgeting after signing a lease, creating preliminary budgets during lease negotiations can be crucial. Landlords often offer a tenant improvement allowance (TIA) - funds to cover part of the buildout - so estimating the costs of each space helps you compare proposals and understand how far each TIA will go.

For businesses focused on growth, considering flexible alternatives like scaling your business with a coworking space can be a cost-efficient strategy.

Below, we've outlined industry standards and best practices for engaging professionals, designing, and moving into office space, based on typical suites in the Washington, D.C., market. Knowing the key steps in an office build out can also improve your planning and budgeting efforts.

Architecture and Engineering Costs

Architecture fees are typically expressed in cost per square foot and the typical drivers of price are the size, cost and complexity of the job. Generally, as the job gets bigger, the cost per square foot goes down and as the job gets more expensive and complex, the cost per square foot goes up. The architecture fee for the design and construction of a typical office suite is usually between $3 and $5 per square foot.

Engineering drawings for the mechanical, electrical and plumbing systems are the “behind the scenes” parts of the construction plans. They show the wiring, ductwork and piping that will be in the space. These fees are also typically expressed in cost per square foot with the same price drivers of size and complexity as those affecting architectural drawings.

Another important aspect to consider when weighing the costs is a proper CRE appraisal. This can provide a detailed valuation of the property, giving you a clear picture of your investment. A typical MEP fee for the office described above would be between $1 and $1.50 per square foot.

If your job involves items such as a staircase or a heavy mobile partition, a structural engineer will be needed. Fees for these types of professionals are typically expressed as a lump sum. These are some of the hardest fees to budget for because the scope of work varies dramatically from project to project. The take-away here is that in relation to the architectural and MEP fees, the structural fee is typically much less, since it typically involves one or two structural elements in a buildout and not a series of items across the entire job.

Construction Costs: Estimating Your Budget

Construction costs typically make up around 75% or more of your total buildout budget. To create an accurate estimate, use a combination of the following methods:

• General Contractor Estimates: Request an initial estimate from a local contractor. These estimates are often conservative, reflecting current labor and material costs, which can vary month to month.
• Space Plan and Takeoff Estimates: Use your space plan to estimate costs by measuring key elements (walls, doors, finishes) and applying unit costs per square foot. This approach gives a precise scope but may need adjustments for changing materials and labor costs.
• Comparisons with Past Projects: Refer to recent projects with similar attributes. Adjust costs based on project size—larger projects often have lower costs per square foot for items like drywall and electrical work, while smaller jobs can see higher costs per square foot due to fixed expenses like general conditions and supervision.

Combining these methods offers a comprehensive view, helping you create a reliable construction budget.

Building Permits and Hiring an Expediter

In major metro areas, a permit expediter that will shepherd your plans through the city’s approval process is the best money you can ever spend. As a reference, it is just about $1,500 for their services in Washington, D.C. Building permit costs vary, depending on the type of permit and jurisdiction so check the local website of the jurisdiction in which you are building. Typically, using 2% of the total construction cost as a budget number will cover the costs of permits and inspections you will need.

Some jurisdictions enable you to pay a third-party consultant to review your drawings before you submit them to the municipality for review. If your project is behind schedule, this third-party review will likely get your permit issued sooner. This service comes at a price of around $0.25 per square foot.

Voice and Data Wiring Costs

This category includes all the wiring necessary for your phones and computers to work. This cost is typically expressed on a per-square-foot basis and a typical job would set the voice and data budget between $2 and $3 per square foot.

Security and Access Control Systems

These are card readers and magnetic locks that are typically outside the scope of the general contractor’s work. The suggestion is that you simply count the number of doors that will have card readers; the first door will cost about $5,000 and each door after that will be about $3,000.

Audio Visual Systems

The AV system includes items such as TVs, video conferencing, speakers in the ceiling and digital schedulers for conference and huddle rooms. This total cost can go from a nominal amount for a small simple job to millions of dollars on a large and complex one. As a starting point, put in a placeholder of $4 to $7 per square foot. However, as a tenant developing a budget, one of the first things you should do is sit down with an AV designer.

Furniture and Liquidation

If new furniture is needed, budget between $20 and $30 per square foot. If reusing existing furniture, costs will be minimal; however, note that old furniture typically has little resale value and may incur disposal costs.

Moving

If you plan to buy all new furniture, the good news is that your moving costs will be minimal, most likely under $1 per square foot to move just your contents. If you must relocate all your furniture, the moving costs will be in the range of about $2 to $3 per square foot.

Landlord Fees and Financing Options

In many leases, landlords charge a project management fee—typically around 1% of the total construction cost—to cover their role in overseeing the buildout process. This fee includes tasks like reviewing plans, ensuring adherence to building standards, and coordinating payments. Factor this fee into your budget early to avoid surprises.

If the buildout costs exceed available funds, consider commercial real estate loans to help finance expenses like construction, permits, and design fees. Loans can provide flexibility in covering upfront costs, allowing you to allocate your budget strategically across furnishings, technology, and other essentials. Before committing, review loan terms carefully and weigh the impact of financing on your total costs and projected ROI.

Signage Cost

If your space requirement is large enough to enable a sign on the exterior of the building, plan on spending about $35,000. The overall cost will depend on the size, height, connection details and complexity of the sign. Interior signage is going to cost less but a professional sign in a reception area could cost around $5,000.

Project Manager

For larger or complex office buildouts, a skilled project manager can be invaluable. They oversee planning, coordinate vendors, and handle unexpected issues, often saving time and money. For example, project managers can negotiate with contractors to optimize costs, monitor timelines to avoid delays, and address potential problems—like unexpected building code requirements—before they escalate. Their proactive approach can prevent common pitfalls that lead to budget overruns and extended project timelines.

Project managers typically charge 3% to 5% of the total project cost, with fees structured as a lump sum, per square foot, or a percentage of the contracts managed. Investing in a project manager can provide peace of mind and ensure your buildout runs efficiently, allowing you to focus on your business operations.

Budget Contingency

A budget always needs a contingency and it should cover two things. First, account for the items you don't know about because a detailed design has not been created; for this add roughly 5% to the construction costs. Second, prepare for unexpected items such as unknown conditions, like unexpected rerouting of MEP items, that will surface once construction starts. Five percent of the overall budget is the recommended figure for unexpected items.

WILL TRAVIS
PRINCIPAL, AVISON YOUNG

Will Travis, AIA, is a principal with Avison Young, focusing on consulting and advisory project management. He has more than 35 years of experience designing, documenting and overseeing the construction of commercial interiors in the Washington, D.C. metro area and around the country. His expertise involves providing project management services for straightforward to highly complex projects, ranging in size from 10,000 to 250,000 square feet.

This article was updated on 12/13/2024