Construction material costs hit an all-time high earlier in the month, propelled by demand and inflationary pressures across the sector.

Post-pandemic demand continues to outstrip global supply, while the availability and procurement of key resources such as timber and copper are being severely hampered by the war in Ukraine (‘Fit-out costs and service charges will hit occupiers more than rent increases in 2022, says Savills’)

Escalating costs and material shortages are beginning to flow through as costs to occupiers, which echoes Savills’ data that the price of fitting-out and service charges will hit office occupiers harder than rent increases. According to Savills, in London’s West End market, the net effective cost to the occupier, which is the combined cost of rent, fit-out and service charge, is £205.33/sq ft a year for Q1 2022.

Limiting these costs to occupiers may leave a substantial dent in the pockets of investors and operators today, but this is a trade-off that the sector must take seriously.

Fit-outs that are compliant with forthcoming sustainability legislation will serve to increase building efficiency, reduce void rates and lower operating costs in the long term.

The implications to the environment, which are not commonly factored into the bottom line, are equally damaging. As designers, we know that fit-out is responsible for nearly 40% of energy in a building.

To alleviate the financial cost to occupiers and the environmental impacts, fit-outs must focus on the continuous use and recyclability of resources that make up the building’s fabric, reimagined materials, local products, circular design principles and supply chain engagement.

This is as important to the building owner as it is to the occupier: making offices greener will play a key role in many major corporates’ ESG strategies – for example, Microsoft, which has set targets over the next 10 years to reduce the built environment’s impact on the climate.

To create attractive and viable investments, climate-resilient and carbon-efficient buildings and interiors will help future-proof against the possibility of stranded assets while also putting money back into the businesses that are driving economic recovery.

Steven Charlton, managing director, Perkins&Will London