Understanding Corporate Interior Costs: Insights from the Kirksey Report
A key component of any lease negotiation is the tenant improvement allowance provided by the landlord to build out or retrofit an office space for the tenant’s specific use.
One of the first questions every tenant has when considering either new or refurbished office space revolves around how much the office build-out or tenant improvements (TI) will cost. The tenant’s cost exposure is a key factor in the decision-making process and an important component in determining your projected total occupancy cost.
Projecting build-out costs beyond general ranges is challenging without the benefit of the space planning process, and there are so many building type options and lease size parameters that affect this estimate.
Our friends at Kirksey Architecture provide an annual Tenant Improvement Cost guideline.
Trends
Supply chain, labor, and economic inflation issues are expected to drive total construction costs up by 3-5% in 2025. While prices for steel, lumber, and roofing materials have decreased, glazing and curtain wall costs have risen. Lead times for materials have stabilized, but electrical products and specialized HVAC items continue to face delays. The rise in adaptive reuse and repositioning projects in 2024 reflects a trend of upgrading existing office spaces to enhance property value.
Corporate interiors costs are also increasing proportionately to the budget tiers, with the most significant rise occurring in higher-end workplaces. These increases can be attributed to a post-pandemic shift in priorities, with many companies now emphasizing the importance of corporate culture and its influence on interior architecture.
All categories reference a 25,000-nrsf floor plate with 50% offices and 50% open-plan. Construction cost only; does not include owner-provided AV and IT equipment. Based on typical costs in Houston, Texas in 2024.
Corporate Interiors
BASIC OFFICE SPACE
$77 to $96/SF ($77 to $91/sf in 2023)
The most basic applicable space with landlord standards but using all new components: basic 2×4 LED lighting, standard 2×2 ceiling, plastic laminate building standard doors with mortised hardware, 18” sidelight at office fronts, minimal millwork, and all plastic laminate, $35/yd carpet tile, standard electrical and HVAC. Add up to $12/s for first-generation space.
MID-RANGE OFFICE SPACE
$100 to $135/SF ($98 to $125/sf in 2023)
Upgraded with linear LED lighting, 2×2 fine line ceiling, wood veneer building standard doors with mortised hardware, full-height glass office fronts in aluminum framing system, more extensive plastic laminate millwork with solid surface countertops throughout, $42/yd carpet tiles, more extensive electrical service with 24/7 server room AC and two supplemental fan-coil units for conference room zones. Add up to $15/sf for first-generation space.
EXECUTIVE OFFICE SPACE
$150 to $270/SF* ($140 to $204/sf in 2023)
Upgraded with some drywall ceiling areas with indirect cove lighting, architectural woodwork doors and frames, demountable glass office fronts; 30% of wall areas as premium-grade architectural woodwork, 40% with acoustical fabric wallcovering, 30% as painted drywall; extensive wood veneer millwork with premium countertops, $50/yd carpet tile, more extensive lighting and custom fixtures for artwork and accent areas. Add up to $17/sf for first-generation space.
- Price ranges are averages; premium executive space can exceed the high end of the range.
FURNITURE
$30 to $80/SF ($30 to $75/sf in 2023)
- Basic office space: $30 to $45/sf ($30 to $40/sf in 2023)
- Mid-range office space: $45 to $60/sf ($40 to $50/sf in 2023)
- Executive office space: $60 to $80/sf ($55 to $75/sf in 2023)
FITNESS FACILITY
$203 to $290/SF ($201 to $275/sf in 2023)
10,000 sf with strength and cardio areas, including rubber flooring, exposed painted structure ceiling in workout areas, frameless glass entry doors, pendant indirect lighting, extensive wiring for AV and TV; men’s and women’s locker rooms to have ceramic tile wet areas (four showers and two toilets each); carpeted dressing areas with plastic laminate lockers.
CONFERENCE CENTER
$198 to $307/SF ($198 to $297/sf in 2023)
Similar to executive office space description except with ceiling system and acoustical upgrades, as well as individual fan-coil units for each room, VIP lounge area with millwork, coffee service, and receptionist millwork.
EMPLOYEE DINING FACILITY, KITCHEN & SERVERY
$280 to $375/SF ($260 to $350/sf in 2023)
5,000-sf kitchen to have 2×4 washable surface suspended ceiling, quarry tile flooring, FRP walls, all equipment by others; servery to have drywall ceiling with indirect cove lighting, ceramic tile flooring, painted drywall; custom millwork at servery and grab-and-go station; dining to have mix of drywall and acoustical ceilings, linear LED lighting, indirect cove and pendant accent lighting; some low walls with architectural woodwork paneling as room dividers, ceramic tile throughout.
Source: Kirksey Architecture
