Fit-Out Costs Rise 5 Across US Amid Labor, Material Pressures

Fit-Out Costs rise 5% across the US despite a cooling construction market, driven by labor shortages and surging material prices.

April 9, 2026

Jordan B.

Fit-Out Costs rose 5% year-over-year across US office markets despite slower construction activity.
Northeast markets saw the steepest increases at 7%, with San Francisco leading at $228 PSF.
Labor shortages, higher wages, and material price hikes are keeping upward pressure on costs.
Ongoing wage growth and immigration policy concerns may further impact fit-out pricing.

Key Takeaways

Rising Prices Outpace Activity

According to Globe St, Fit-Out Costs continue to surge nationally, up 5% year-over-year even as overall construction activity cools. Cushman & Wakefield reports that labor shortages, escalating wages, and rising material prices are driving average office fit-out expenses to record highs in major markets from New York to San Francisco.

The Northeast leads the increases, with a 7% surge, while markets like the Midwest saw milder jumps just above 2%. San Francisco posted the highest office Fit-Out Costs at $228 PSF, trailed by San Jose ($224 PSF) and Seattle ($223 PSF). New York City, Boston, and Los Angeles are also among the most expensive markets for office fit-outs.

Labor and Materials Drive Up Fit-Out Costs

A persistent imbalance between high demand and limited skilled labor continues to raise wage costs—even as construction employment grows only modestly. Wage increases for construction are up 5–8% annually, contributing to consistently higher Fit-Out Costs. At the same time, developers are also facing added pressure from tariffs and labor shortages that are pushing overall construction costs even higher across projects.

Material prices have followed suit. The McGraw-Hill construction cost index recorded a 10% year-over-year increase in copper, while steel and concrete climbed about 5% each. With copper, cement, and steel all up sharply since 2022, project budgets are under added stress.

Long-Term Pressures and Policy Concerns

The current trend of rising Fit-Out Costs could be self-reinforcing if wage growth continues unchecked. At a 5% annual rate, costs could double in less than a generation. Looking ahead, about one-third of industry respondents expressed concern that stricter immigration policies could further constrict the labor pool, accelerating cost pressures.