VVA: interior costs declined by 15%.

Construction costs for standard law firm, corporate and financial services firm office interiors in New York have declined by more than 15% over the last two years. This downward spiral was reflected in the Third Quarter 2002 VVA Index, a comprehensive study of interior construction costs published by VVA, LLC. According to VVA, the premier project management and consulting firm headquartered in New York, construction costs fell for each business sector for the third successive quarter and is expected to continue decline well into 2003.

The VVA Index, compiled from many industry sources, including contractors and suppliers, as well as the company's own $15 billion project value database of the hundreds of interior projects it has directed, indicated that construction costs have declined steadily since Mid-Year 2000, when pricing reached an apex. Costs were tracked over five years for three different project types -- corporate space, law firm space, and financial services space. The findings revealed that the prices are approaching a five-year low and no change in this trend is seen for the immediate future.

"Office tenants that are involved in or planning a relocation or re-stacking of their space in 2002 have found that their construction dollars are stretching farther as costs continue to decline across all facets of an interior build-out," said Lorenzo Vascotto, a principal of VVA, commenting on the findings of the index.

For corporate space, mid-1998 interior build-out costs averaged $60 per SF or all "hard costs" (including power and lighting, electric, dry-wall, carpentry, HVAC, fire protection and carpet, but excluding furniture). At the same time, traditional law firm space was comparable to corporate space at approximately $70 per SF and financial services space (with a much more open-plan configuration) cost $85 per SF.

By mid-2000, those costs had risen by 25% or more in each sector: Corporate space costs approximately $85 per SF to build; law firm space costs averaged $110 per SF; financial service space costs approximately $120. And today, at the conclusion of the third quarter of 2002, interior build-out costs are at their lowest since 1998. Pricing stands at approximately $60 per SF for corporate space, $85 for law firm space, and $100 for financial services space.