Dive Brief:

• Silicon Valley is the most expensive place to build out office space in the U.S., at $199.22 per square foot of out-of-pocket costs, according to real estate firm JLL's 2017 U.S. Fit Out Guide.  
• The national average out-of-pocket cost to build out an office, when considering the typical landlord allowance of $43.61 per square foot, is $152.88. Factoring that in, Washington, DC, came in as the most affordable at $103.88 per square foot.  
• The Northwest region of the U.S., including Sacramento, CA, Seattle, Portland, OR, and the San Francisco Bay Area, is the most expensive region to build out. Southern cities, such as Houston, West Palm Beach, FL, and Hampton Roads, VA, made up six of the 10 most affordable markets.

Dive Insight:

Tenant build-out costs, though steep in some metro areas, can be more affordable than building from the ground up. Los Angeles registers as one of the most affordable cities for office build-outs at $130.68 per square foot, but it is one of the most expensive cities for overall construction, according to Arcadis' March International Construction Costs Index. New York City is the most expensive place to build a new office development, with costs double the average U.S. metro's. The city is also one of the most expensive in which to build-out at $179.13 per square foot.

Despite heavy costs, 2017 is set to be the year of office construction. Office construction starts in 2016 were projected to outpace 2015's figures by 9%, according to Dodge Data & Analytics, thanks to a number of megaprojects in New York City. That number is expected to grow in 2017, with 10% more construction starts — 110 million more square feet — than in 2016.

When it comes to revamping existing space, companies are turning to amenities to attract and retain the best and brightest workers. Building in up-to-date technology and onsite services such as emergency child care, an on-call nurse and food delivery are some ways companies are trying to win the competition for a top workforce, though office design also plays a role in how well employees perceive the workplace. Flexible, collaborative spaces, interesting environments, such as converted warehouses or historic buildings, and sturdy fundamental infrastructure from elevators to HVAC systems are becoming increasingly vital to a company's survival.

JLL's full list of the most expensive cities/areas in which to build out an office space include:

1. Silicon Valley, CA — $199.22 per square foot of out-of-office expense
2. Sacramento, CA — $198.24
3. Long Island, NY — $196.18
4. San Francisco — $192.13
5. New York City — $179.13
6. New Jersey - $177.82
7. North San Francisco Bay — $177.63
8. Detroit — $175.13
9. Chicago — $174.70
10. St. Louis, MO — $169.19

The most affordable cities are:

1. Washington, DC — $103.88
2. Houston — $117.47
3. West Palm Beach, FL — $117.56
4. Hampton Roads, VA — $126.65
5. Atlanta — $128.83
6. Los Angeles — $130.68
7. Seattle — $133.12
8. Raleigh-Durham, NC — $134.07
9. Baltimore — $134.53
10. Fort Worth, TX — $134.66