While inflation has begun to slow across the Americas, the construction industry remains under strain. A combination of new tariffs, labor shortages, and rising material prices continues to challenge businesses heading into 2025.
The slowing of inflation has brought some relief, with construction costs falling below their 5- and 10-year averages. However, industry leaders remain cautious.
“Our survey shows that general contractors expect permitting times will continue to be a major pain point as well, leading to project delays and more uncertainty,” said Brian Ungles, President, Project & Development Services, Americas.
Office construction has taken a hit, with new office space down by 40% year-over-year. This has led to increased demand for renovations and fit-outs in existing offices. As a result, landlords are offering higher tenant improvement packages, but these come at a cost. Some markets have seen TI allowances jump by 20% in the past year.
“While new office construction pipeline has decreased, costs for all construction will continue to rise with more fill-out activity in existing offices and the strength of new construction in other sectors,” said Richard Jantz, Tri-State Lead, Project & Development Services.
For those looking to plan office upgrades or new construction projects, Cushman & Wakefield’s 2025 Americas Office Fit Out Cost Guide is offering in-depth analysis of 58 markets. This guide includes updated costs for a range of construction trades.
While inflation slows, rising materials costs and the complex challenges of labor shortages and tariffs ensure that the construction landscape will remain turbulent. As projects move forward into 2025, businesses must carefully plan and adjust to these ongoing pressures.
