London fit-out costs trail only New York

Turner & Townsend has ranked London as the world’s second most expensive market for high-specification office fit-out, with the capital sitting behind only New York as occupiers continue to compete for scarce top-grade space.

The consultancy’s latest global fit-out data places high-specification London costs at $5,872, or around £4,397, per sq m. New York is narrowly ahead at $5,886, or around £4,407, per sq m. London costs have eased by 1% over the past year, although that reduction has not shifted the capital from the top tier of global fit-out markets.

Cost pressure is also visible beyond the capital. Edinburgh and Glasgow are reported at $3,859, or around £2,889, per sq m after a 12% rise, while Birmingham is at $3,857, or around £2,888, per sq m. Manchester is reported at $3,666, or around £2,745, per sq m.

The figures show how far the office market has split. Some older and secondary space continues to face weak demand, while premium buildings in strong locations are still drawing occupiers prepared to invest in amenity, sustainability, workplace experience, and technology. Fit-out teams are being asked to deliver more technical scope within the same floor area, with services, digital systems, and user experience becoming more deeply embedded in the specification.

AI-ready offices are now part of that higher specification. Stronger digital connectivity, smarter lighting, responsive climate control, collaboration infrastructure, space-use monitoring, and upgraded building systems all add to the work that contractors and specialist suppliers have to coordinate. The modern office fit-out is increasingly a technical services project as well as an interiors package.

London’s shortage of high-quality space is keeping pressure on both landlords and occupiers. When Grade A supply is limited, developers have stronger incentives to reposition existing assets, pursue retrofit, and bring forward complex refurbishment projects. That is feeding work into commercial construction, although the route to delivery is often difficult, with existing structures, live environments, buried services, and planning constraints adding risk.

British Land’s West One scheme above Bond Street Underground Station captures that shift. McLaren Construction’s £99m retrofit contract involves retaining, extending, and reconfiguring a complex existing asset to create premium commercial space in a constrained location. The project shows how demand for prime office accommodation is translating into technically demanding refurbishment rather than straightforward new-build delivery.

High-spec fit-out carries commercial opportunity, but the margin for error is narrow. Contractors must manage demanding finishes, compressed programmes, tenant-driven change, intense building services coordination, and close engagement with designers, landlords, occupiers, and product suppliers. Where AI, smart building systems, audiovisual packages, and workplace analytics are included, the boundaries between IT, M&E, furniture, partitions, ceilings, fire strategy, access control, and facilities management become harder to separate.

Cost management will remain central through 2026. Occupiers may still want premium space, but budgets are being examined closely. Construction teams will need to demonstrate value through early design interrogation, material selection, procurement timing, logistics planning, and tighter control of change. Older buildings being repositioned into Grade A stock add uncertainty around surveys, hidden services, structural constraints, and embodied-carbon decisions.

The current cost rankings do not suggest a broad recovery across all office stock. They show a sharper market, where high-quality buildings in the strongest locations are still attracting investment while weaker assets face a more difficult leasing and refurbishment case. Fit-out demand remains strong at the top end, but the work now requires much tighter technical coordination than a conventional interiors-led programme.