New workplace standards demand an evolution of office design

CHICAGO, May 29, 2024 – Office design is evolving faster than ever to meet new workplace standards. According to JLL’s new U.S. and Canada Design Trends and Cost Guide, human-led design and sustainability will be the defining forces in office fit-outs in 2024 and beyond but come with more complex cost considerations for occupiers and owners alike.

A shift toward human-led design is reshaping workplaces, with an emphasis on creating spaces that support both collaborative and focused work, for virtual and on-site employees together. Balancing the flow of employee's work throughout the day requires a responsive physical space, which is in short supply in the U.S. and Canada. Similarly, sustainable office spaces are facing overwhelming demand with the increased number of corporate net zero commitments.

“Financial stewardship and disciplined capital investments are increasingly important to our clients who are trying to make smart investments or do more with less,” said Julie Hyson, Americas Portfolio Clients, Services & Industries Lead, Project and Development Services, JLL. “We have the privilege of helping our clients engage talent and drive optimal business performance by leveraging the power of culture and space.”

Following two years of double-digit cost growth, average fit-out costs for 2024 grew just 2.7% year-over-year for moderate-style build outs with medium-quality finishes. Of the more than 50 metro areas tracked, those seeing the most rapid cost escalations in 2024 remained below half the national average increase in 2023, and at just a quarter of the historically high inflation observed in 2022.

“Stabilizing material prices and contractors looking to build up backlogs kept hard and soft cost growth near pre-COVID historical ranges,” said Andrew Volz, Research Manager, Project and Development Services, JLL. “Stable price increases are expected again over the course of 2024, with areas of growth reflecting the continued evolution of the office around hybrid work, connected human experiences and the built environment to support it.”

Office fit-outs are evolving to meet the needs of new hybrid work models. The three trends to consider when developing office fit-outs in 2024 are:

1) Human-led design is reshaping workplaces

The stabilization of hybrid work patterns is solidifying the shift toward human-centric office design. While hybrid work offers flexibility, the emphasis remains on creating spaces that support team collaboration as well as individual focused work, with sound privacy and the integration of technology to enhance the overall human experience.

“Well-designed workspaces, complete with the right mix of purposeful furniture and technology, can reinforce employee satisfaction,” said Stephen Jay, Americas Head of Design Solutions, Project and Development Services, JLL. “We design and create spaces that exemplify our client’s culture and support their people by prioritizing their physical, social and mental wellbeing.”

2) Sustainable spaces are paramount

With more companies committing to net zero targets, there is an increased emphasis on incorporating eco-friendly practices in office fit-outs. This includes the adoption of lower embodied carbon targets and circular economy principles that aim to maximize resource use, minimize waste and regenerate products and materials.

While there may be up-front cost premiums, green energy solutions and low-carbon materials offer long-term returns on investment. There is a rising demand for low-carbon offices, prompting efforts to improve the quality of existing office fit-outs.

“There is a rising demand for sustainable spaces that support both an organization’s low-carbon goals and meet their employees’ rising expectations,” said Louis Molinini, Americas Market Lead, Project and Development Services, JLL “By investing in sustainability, we help our clients live their values by demonstrating their commitment to environmental responsibility, while creating spaces that support the way they work.”

3) Cost considerations grow more complex with hybrid

The emergence of hybrid work environments has introduced unique cost considerations. Designing spaces with advanced technology to accommodate in-person and virtual collaboration tends to require more capital. As a result, organizations are spending more on multifunctional rooms and virtual meeting technology to support their hybrid work model. However, the benefits of employee retention, satisfaction and productivity from adopting hybrid workplace designs lead to strong incentives for companies to invest in office enhancements.

Creating spaces to accommodate both in-person and virtual collaboration need to be technologically equipped, and these supporting technologies are transforming rapidly and prices are increasing. Cost allocations for audio/visual and other systems that support these needs directly continued to see elevated growth despite broader stabilization in other categories of cost allocations.

Cost growth here will likely remain elevated as the industry continues to embrace, experiment and refine what is needed for hybrid work. Occupiers are still in the early stages of adoption for most technology related to their CRE functions, with only half reporting to have adopted dedicated in-office collaboration or remote working tech.

Investing in workspaces that improve wellbeing has a positive impact on performance, delivering greater satisfaction for the employees and employers in the space. Spaces with the highest improvement scores following an office redesign can be directly linked to improved performance and well-being. Good design can positively impact health and wellness, employee retention, attraction and satisfaction as well as meet environmental sustainability goals.

JLL Project and Development Services is a leader in the development, design, construction and branding of commercial real estate projects for the world’s most prominent corporations, educational institutions, public jurisdictions, healthcare organizations, industrial facilities, retailers, hotels, sports facilities and real estate owners. Ranked No. 2 Retail Design Firm by VMSD, No. 4 Top Development Company by Modern Healthcare, No. 2 on Engineering News-Record’s list of Top 100 Construction Management Firms and No. 9 on their list of Top 50 Program Management Firms, No. 5 in Building Design + Construction’s Construction Management Giants survey and No. 22 on Interior Design Top 100 Design Giants, JLL’s project management team comprises 8,800 project managers across 80 countries with $87.4 billion in projects managed annually. Visit us.jll.com/deliver-projects to learn more.

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