The cost of building a modern office in the United States and Canada has been structurally reset, with average fit-out costs now reaching $295 per square foot for a medium-quality space, according to the new U.S. and Canada Office Fit-Out Costs Guide 2026 from JLL.
Outpacing the global benchmark for medium-quality fit-outs ($205 per square foot) is driven by persistent structural pressures and limited supply while the competition for talent is making investment in high-quality, tech-enabled space a business imperative.
"Clients who are holding out for costs to come down before committing to a project are taking a real risk," says Louis Molinini, head of project and development services, Americas at JLL. "The structural pressures – labor, trade, technical complexity – are not going to unwind on a timeline that favors waiting. The primary way occupiers compete for talent right now is through the quality of their space, and the bar for what that means has moved up considerably."
Key takeaways:
· Office availability has now fallen for an unprecedented seven consecutive quarters in the United States, while the construction pipeline remains at historic lows. As a result, occupiers are competing for a limited pool of high-quality existing space, making strategic renovation and fit-outs the primary pathway to securing the AI-ready, talent-attracting environments they need.
· Technology is the new standard for a competitive office, with previously premium offerings like integrated building systems and advanced AV now considered baseline requirements. Mechanical and electrical (M&E) services now account for 29% of a typical fit-out, with security, IT, and AV (SITAV) representing another 10%. Combined, these technology-related systems make up nearly 40% of total costs.
· Trade and tariff policies continue to impact the cost of construction materials, while global energy instability affects supply chains. In tandem, structural labor shortages are creating acute scarcity in the technically skilled trades most relevant to building out today's complex, AI-ready workplaces.
· New York anchors the high end of the cost spectrum, with San Francisco and Boston close behind. While mid-range markets like Chicago and Seattle are more competitive than the coastal gateways, the Sun Belt markets, including Dallas and Atlanta, represent the most competitive end of the spectrum, supported by larger and more flexible labor pools that have absorbed the current cycle's cost pressures more readily.
· Canadian office fit-out costs are up 3-4% in 2026, with cities like Toronto and Vancouver consistently landing at or above the upper cost range of comparable U.S. secondary markets, reflecting distinct structural labor costs and regulatory environments. This creates consequential uncertainty for occupiers managing cross-border portfolios, especially as the mid-year USMCA review is expected to have consequences for materials and tariffs on both sides of the border. However, Canada's relative insulation from global energy price volatility through its domestic supply may mitigate some of the larger cost swings threatening other global markets.
