The higher cost of construction and design services for office space has cooled in parts of the United States, a change that some project professionals hope is a sign that tenants and landlords could look to resume stalled or delayed plans for interior renovations.

Design and construction costs are expected to climb about 2% this year in some U.S. markets, according to a new report from property services provider and brokerage JLL. Among the lowest for anticipated cost increases is Detroit, where the estimated average expense for a build-out this year rose 1.63% from 2023 to $249 per square foot, and Miami with an anticipated gain of 1.76% to $231, while Dallas could see a 2.25% climb to $227.

The highest cost in the United States? That's San Francisco, where the average renovation is $303 per square foot, the study found, followed by New York at $302 and San Jose, California, in third at $297. When it comes to the highest estimated climb in average build-out costs over the past year, Salt Lake City tops the list with a rise of 6.14% to $242 per square foot, with Las Vegas in second at 5.56% to $266.

But even in some of the most expensive U.S. markets for corporate interior design work, some firms decide to devote capital to an office refresh, said Stephen Jay, JLL's head of design solutions, project and development services in the Americas. More employers are mandating that workers come to the office at least a few times a week, even as companies are accepting of hybrid work schedules, he said. He added that as tenants reduce space with fewer staff around five days a week, they are creating chances for more in-person collaboration.

“There is a structural change in the way people think about work and all of us have been permanently affected,” Jay told CoStar News.

Overall, following two years of double-digit growth, average costs to renovate an office grew just 2.7% in 2023 from the prior year for a build-out of medium-quality finishes, according to JLL's 2024 U.S. and Canada Design Trends and Cost Guide. This year, renovation costs across the country are expected to rise an average of 2% to 4%, a range JLL described as reasonable.

JLL said it uses the term “moderate-style” to refer to designs that include a predominantly open office floor plan with small- and medium-sized workstations and about 70% of seating for desks and cubicles with 30% for collaborative spaces like benches and tables.

Labor, building materials and design are considered the primary monetary drivers for workplace interior design projects. In Dallas, Detroit and Miami, the average cost for an office renovation in 2024 is projected to rise at a slower pace than the U.S. average when compared to last year, JLL said. In Charlotte, North Carolina, the average cost is expected to remain unchanged this year, making it the only U.S. market where costs are not projected to rise.

To be certain, JLL has a vested interest in its report finding that more clients should pursue upgrades: The company not only provides consulting services on interior design, it also performs design work itself.

Even so, other design firms have recently advised companies and organizations of the benefits of redesigning offices to reflect post-pandemic work schedules, including Gensler, the world's largest architecture firm. Only about a third of U.S. companies had redesigned their offices in 2023 after the pandemic, according to the Gensler study. JLL's report is one of the first to provide an estimate of the costs that design clients can incur from such a decision.

Some corporate decision-makers took a wait-and-see approach after the pandemic about whether to renovate offices in the hopes that a clearer view would emerge on how many people would return to an office, Jay said.

Now that it's apparent that some form of hybrid work schedules will remain, along with at least some degree of required office attendance, executives can move ahead on design decisions.

Office attendance continues to tick upward, albeit at a slow pace, as more employers demand workers come back to the office. Big city office attendance averaged 51% of pre-pandemic levels for the week that ended May 15, according to keycard data monitored by Kastle Systems. That was up from 50.9% during the prior week.

Recently, Citigroup and other Wall Street banks have ordered some employees to come to the office five days a week, as federal regulators pressure banks to do a better job keeping a close eye on workers, according to Bloomberg.

Costs can vary sharply based on the market, the quality of materials used and the extent of the renovation, according to JLL. The figures were compiled by an analysis of thousands of construction projects in North America managed by JLL Project and Development Services.