Cost per Square Foot of Commercial Construction by Region

by Dean Dalvit on August 6, 2009

We get this question all the time: How much does it cost to build a commercial building? There is no quick answer and without more information about the project and its location, is essentially akin to asking how many angels can dance on the head of a pin. However, there is some guidance provided we know where you are located and what kind of building you are looking to build. Local economy is a very important factor in construction cost as well as the type of construction you intend to build.

We subscribe to RSMeans’, researchers of construction cost data nationwide, and have come across some important current data on the cost of commercial construction for four different commercial project types as a function of their location. Note, that not all types of construction cost the same per square foot, and even more importantly, the cost of construction per square foot varies significantly with location.

Below are four different types of commercial construction and the varying cost per square foot to expect for each in different regions.  All graph images are courtesy of RSMeans Construction Cost Data. Data source: Reed Construction Data – RSMeans/Charts: Reed Construction Data – CanaData

One Story Office Building

As you can see from the range of cost per square foot, location alone can represent as much as 70% of the cost driver for a single story office building. The median for this type of construction is between $160 and $170 per square foot. Not surprisingly, New York tops the charts for most expensive city to build in for all of these building types.

Convenience Store

Convenience stores are generally less expensive to construct than the other building types because of their simpler nature.  The median cost for this commercial building type hovers around $100 per square foot.Fast Food

Because of the new trends in fast food being more boutique and less assembly line, the cost for a typical fast food restaurant is on the rise. Expenses for kitchen equipment also drive this building type to a median of near $200 per square foot, the most expensive of the four building types in this discussion.

Day Care

It is increasingly important to understand the cost drivers for any commercial project and how building type, construction type and location can all be huge variables that will drive your cost per square foot. These are always a part of the initial programming discussions and the Architect will play a huge role in helping to define the ranges of cost to expect for the project.

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{ 233 comments… read them below or add one }

Dean Dalvit December 4, 2016 at 10:26 am

Dan,
Thanks for your questions. Construction cost in urban versus rural environments depends on many factors. Availability of labor and materials often reduces construction cost in urban areas, however site logistics can be much easier in rural areas, lowering costs. So it really depends on the specific locations to assess a good comparison.

As for construction type, wood construction will certainly be your least cost option. However, use and occupancy will typically dictate the construction type you must use based on the building code. From what you described, a building size that small should be able to be built with wood construction per the code.

With all of that being said, I would expect a project that you described to fall between $80 and $100 per square foot, depending on site considerations, design complexity and level of finish. Strip retail is typically build out as a core and shell product with the tenants handling some or all of the tenant finish costs. That is of course something that would be negotiated in each of your lease agreements, and should be considered in your overall pro forma. We have completed hundreds of thousands of square feet of commercial retail space very similar to this and would be happy to assist you in taking the next steps.

I will have Jim Salyer, our regional director for Texas office reach out to you separately. We would be happy to discuss this project with you further and can assist you with the architecture and engineering services you would need to secure the permits and build the project.

Thanks again!

Dan December 2, 2016 at 6:39 pm

Thank you for sharing your knowledge.

I’m looking to build a small strip mall, about 10-12,000 sqft in rural Hopkins County in Northeast Texas. I have a few tenants interested already (a gym, a health food store, a juice bar/healthy food restaurant). I figure I can have at least four decent spaces there.

The land is outside the city limits, so just in the county, but close enough to likely be annexed by the city so they get their taxes once we build. Utilities are readily available.

Are the costs for construction usually much cheaper in rural environments versus city? If so, how much is the average or general range? Is there a certain type of construction that is most cost effective (stick vs steel vs concrete)?

Thank you very much for any advice you can provide!

Dean Dalvit December 2, 2016 at 9:58 am

Henry,
Thanks for reaching out – we’re happy to help. First, you are correct in that there is definitely an economy of scale when you are building out a complete project as opposed to breaking it up into a core and shell and separate TI piece. With a working budget of $142.50, that does seem on the low end of things. There is a wide range of course on projects like this and the level of finish plays a significant role in the overall costs. I might start a core and shell for the building at $90-$110/sq.ft., then consider the interior finish. that would leave you roughly $40/sq.ft. to finish. This can be done if you’re ok with more of a spartan aesthetic. If your FF&E budget covers the atmosphere you’re looking to achieve, then that may be just fine, though you mentioned that includes your contingency. Which puts you in a risky zone if you’re going in knowing that you’ll be spending your contingency (then it’s not really a contingency – it’s part of your budget). Having just completed the design for the Celtic Tavern in Denver, we do have some very current data that may be applicable. In that case, the owner already had a great deal of the FF&E that created the ambiance and the building itself was really just a shell. In any case, I will have Jim Salyer, our Regional Director in our Austin office reach out to you directly. He can help you hone your scope and numbers so you have the best information going in to the project. We have a depth of experience with restaurants, both ground up as well as TI, so I’m certain we can help you take the next steps. Thanks!

Henry December 1, 2016 at 3:02 pm

Hello Dean – Writing from Austin Texas – this is a great website and thanks for taking the time educate us less than experienced budding property developers.

Above I see that you break down the cost of the shell and mechanical from the inside build which brings me to a finished cost of anywhere between $120-$210. I am trying to develop a 4,000 sq ft stand alone restaurant on property my company currently owns in Austin (nice level lot with utilities readily available) and I am trying to nail down build cost estimates. The build would be for a fit and finish inline with a nice Irish pub. My business plan estimate was $125 sq ft for a complete build with $70k in contingency monies for a total sq ft cost of $142.50.

That being said – are there economies of scale when you develop a building from start to finish and do the build out at the same time? In your opinion, do you think my price per sq ft is low? FYI – We are just talking about the building, HVAC, plumbing fixtures, and electrical. No kitchen equipment or kitchen counters, furniture, or anything else. Closest comparison I can make would be walking into a new house.

Thoughts

Thanks – Henry

Dean Dalvit October 29, 2016 at 9:26 am

Rukhsana,
Thank you for your question. We actually have a great deal of experience designing strip malls all over Texas out of our Austin branch office. Typically, these projects build out in two phases. The first phase is what we call a “core and shell”, which is the overall building and site, finished on the outside and with all primary mechanical and electrical systems in place. Then, the second phase would be a “tenant finish “phase where either the building owner or the individual tenant completes the interior finish of the specific tenant space.

There are many variables that affect construction cost, however for a typical strip mall in Texas, we would expect the core and shell phase to range anywhere between $90 and $120 per square foot. The tenant finish cost is even more difficult to nail down without knowing who the tenant is, and what kind of use it will be (retail, restaurant, etc.). We typically advise clients to plan for between $30 and $60 per square foot for typical tenant finish costs. With an actual user and a complete design program, we can get significantly closer with all of these numbers. Please note that these are building construction costs only and do not include land costs, finance costs, soft costs, site improvement costs, entitlements costs, or FF&E costs.

I will have our Texas Director of Architecture, Jim Salyer, reach out to you separately. With Jim’s extensive experience and knowledge with strip retail projects, he can provide more information after learning a little bit more about your project. Thanks!

Dean Dalvit October 29, 2016 at 8:51 am

Lance, thanks for reaching out. I have actually written another article that is more specific to multi-family projects over eight stories. While that article is geared more towards for-rent product, it is certainly still applicable. The link to that article can be found here: http://evstudio.com/cost-per-square-foot-for-construction-for-8-to-24-story-apartment-buildings/

What you will see is that construction in the mid rise sector is quite a bit more expensive than low rise construction. This is because the construction type has to be of a non-combustible structure. For the project you are describing, if it were to be built in a comparable location in the US, it would be over $200 a square foot. You described 2500 square-foot condominium units and only two per floor – this tells me these are likely high-end luxury units. Only having two units per floor also creates a lot of inefficiency in the building that will also drive cost per square foot. As a result, your construction costs could easily reach $250 a square foot or more, again, if built in the US. Please note that these figures are for the construction cost of the finished buildings only and do not include land costs, finance costs, soft costs, FF&E, site development costs, offsite improvements or governmental regulations that would need to be addressed.

In order to bring that number down, if there is any way to rethink how the units fit into the footprint on the site, you can gain much greater efficiency by putting more units on each floor and have fewer buildings. The other consideration is very specific to Costa Rica. I actually have some experience with a developer that did a number of projects in Costa Rica and there were two major challenges that drove cost. The first was the approvals process that was unnecessarily cumbersome and impacted the schedule for the project. The second was the procurement of concrete and other materials for those projects. Before you get too far into the design, I would highly recommend you secure a negotiated agreement with a contractor that is very experienced in your specific location and that has great connections in the materials and labor markets in your area.

I hope that helps. If you have any further questions, or if you would like to discuss how we may be able to help you with the design of your project, please don’t hesitate to reach out at any time at 303-670-7242 or design@evstudio.com. We are highly creative when it comes to great design with tight budgets. And we are very experienced with multi family projects as well as working internationally and we would welcome the discussion. Thanks!

Lance October 28, 2016 at 4:26 pm

Hey Dean-
Love that you spend the time actually answering questions that others may have whether for general knowledge or for an upcoming project. We recently paid off our land in Costa Rica and interested in building 80 condo units (4 buildings, 10 stories each, 2 units per floor, 2500 square feet per unit) totaling 200,000 square feet. Obviously the construction costs will be somewhat different (higher material costs, lower labor costs, etc) however what would the median construction costs be for this type of project if it was in the US?

Rukhsana C October 28, 2016 at 3:29 pm

What is the average cost of building wooden structured striped mall in and around Harris County, Texas – USA

Dean Dalvit October 26, 2016 at 5:05 pm

Thanks for your question Courtney. Unfortunately though, it’s like asking “How long is a piece of string?”. There’s no way to answer it without more information. Like the size, plumbing fixture count, level of finish, etc.. And even with all of that, the RSMeans cost data that we’re working from here in this post doesn’t get into that level of detail. However, that level of detail is available (for a fee) from RSMeans if you would like to seek out the industry expectations for any specific project- be advised though that you would need to build it up from individual trade line items, the very same way a contractor would. Best of luck with your project!

Courtney October 26, 2016 at 11:03 am

Trying to figure out a commercial bathroom remodel in Houston. What do you think the contractor should come in at per sq. ft. Thanks

Dean Dalvit October 17, 2016 at 5:21 am

Edrian,
I don’t have data outside the US, however, if I were to build a two story office building in a similar location in the US, I would use $150-$180 USD per square foot. This depends on a great many factors, but for your purposes, should be a good starting point. You will have to convert both currency and area units to get a figure you can likely work with. Best of luck on your project!

Edrian October 16, 2016 at 6:22 am

Hey Dean,
If you would ask where we are located, we are situated in the Philippines. :) Thanks agaaaaaain

Edrian October 16, 2016 at 6:15 am

Hey Dean!

Me and my schoolmates are tasked to make a business plan. Our project is a potential electrical company which is tasked for distribution purposes. I would like to ask how much will we be our possible cost if we will put up a two story building which occupies 1000 square meters. Probably, cement will be the major component of our building. I really hope you can reply since I am not an expert on this kind of stuffs. Thanks!

Dean Dalvit October 14, 2016 at 5:51 am

Sunitha,
For typical tenant finish space, we typically use anywhere from $30-$60 a square foot depending on the level of finish that you’re looking for provided the existing space already has mechanical, plumbing and electrical service that simply needs to be re-distributed, and there are no changes to the structural or exterior core and shell the building.

However, there is an important thing to note here because you are describing classroom space, which could be a change of use for the existing building. If you change the use from retail to assembly space, you may also have to provide upgrades to the existing building for fire separation walls to adjacent spaces, sprinklers, exiting, accessibility upgrades, and upgrades to mechanical systems. You might even have to add additional parking on site, depending on the zoning the building is in.

So it really depends on the nature of the building if this change of use would create additional costs above typical tenant finish costs or not. For older buildings, this can create the real problem as they were not originally designed to code as a change in use requires upgrades across the board to the current codes (in other words, no grandfathering of existing conditions).

Because of this, I highly advise you to have a licensed Architect look at the existing space with you so they can tell you what you would have to plan for and if the space is appropriate for what you were looking to do without major costly alterations to the existing building. A few hours of someone’s time is well worth the potential of making a mistake that could cost you literally tens or even hundreds of thousands of dollars more than you need to.

I hope that helps. Best of luck with your project!

Sunitha October 13, 2016 at 10:03 pm

Hi
I am looking for cost estimates in seattle area converting a retail space used currently as storage into 4 classroom, a small kitchen and bathrooms (2 and 2 for boys and girls with 2-3 sinks) . The total sqft space is 4400. How much would it cost approximately?

Dean Dalvit October 10, 2016 at 7:57 am

Greg,
Your assumptions are correct – these costs are strictly building costs and do not include site development costs or site work. Those would be on a separate ledger for your pro forma. Similarly, these costs also don’t include land costs, finance costs, Soft costs or FF&E. I hope that helps!

Dean Dalvit October 10, 2016 at 7:55 am

Jim,
We do have loads of information on retail costs as that is a core market that we serve in our A/E business. Can you be more specific about what you’re looking for – specific location, particular retail submarket/product type? Happy to help.

Greg Neiss October 10, 2016 at 7:42 am

Good morning Dean,
I am starting a cost analysis for a project located in the Washington D.C. Metro area. The project is a base building with three individual units. One unit has the interest of a major coffee shop company and it will require a drive through window. I used the 2009 chart and added a 3% yearly multiplier. The base line comes to $172.30 per sq. ft.. I believe this is a good starting point however my question to you is, does the chart take in account of the site work, landscaping, exterior pole lighting, parking lot, etc.? Or is it just the cost of the building? I am assuming that all of the site work listed above would require additional costs. What are your thoughts?
Thank you very much,
Greg

Jim October 9, 2016 at 5:12 am

Hello
Do you have any data for buildng out in line retail locations compared to high street locations in the major markets in the US approximately 5,000 sq feet.

Dean Dalvit August 25, 2016 at 9:24 pm

Rudy,
Excellent question! Construction costs vary every year, so no, it would not be appropriate to apply 2009 figures to anything beyond 2009. However, it’s very simple to adjust for any given year up to the present year by using a construction cost index. This is essentially a simple multiplier that you apply to the numbers in the chart based on the difference between the adjusted index for 2009 and this year. See the following link for the RSMeans Construction Cost Index numbers for every year dating back to the ’60′s as well as instructions on how to use it: https://www.rsmeansonline.com/References/CCI/3-Historical%20Cost%20Indexes/1-Historical%20Cost%20Indexes.PDF
Best of luck!

Rudy August 25, 2016 at 7:33 pm

Dean,

Thank you so much for this informative article. I noticed this was written in 2009. Would these figures hold true for 2016?

Dean Dalvit August 17, 2016 at 5:05 am

Foad, thanks for your question. That will definitely depend on the particular city you are in. Our experience is that utilities themselves are most cost effective to connect (dry utilities) and/or tap (wet utilities) in the urban core of a city because the infrastructure is built for that and fees are most advantageous for most major cities because of the economy of scale and a City’s desire to attract development. Out on the edge, certain infrastructure may or may not be as readily available, and if you are outside certain districts, tap fees typically rise the further out of the urban core you get. These are not hard and fast rules though. Every city is unique and each would need to be analyzed based on its specific infrastructure conditions and available utility providers.

foad August 16, 2016 at 11:30 pm

is the cost of construction inside the city utility zone more, less, or the same for a property on the edge of the city limit

Dean Dalvit August 5, 2016 at 5:51 pm

Sorry Billy, but I don’t quite follow your comment. Did you have a question?

billy thamos August 4, 2016 at 11:23 am

no elect. no pluming, no metal builing just a 2000 sf warhouse in iving, tx

Dean Dalvit May 2, 2016 at 7:24 pm

Thanks Robert for your information – we always welcome the input and experience of others in the industry.

Robert Raymond May 2, 2016 at 7:16 pm

This is such a refreshing site to see! No one is asking for a trial period or fees of any kind…just input and feedback! I am a commercial real estate broker with decades of experience and several hundred thousand square feet of re-development in the greater north east. At this time, depending on the market, the fit-up costs…ie.. the cost of refurbishing an existing space(vanilla box) is running about $50-$60 s/f. So for example, a 2000s/f former tenanted space that has existing HVAC, electricity, and bathroom(s) will cost about $100-$120K to re-purpose. That is contingent on a number of issues such as if the existing vacant space space(say an old big box of 20,000s/f) is being sub-divided(now you need to break up the utilities) and must install demising fire-proof walls that may also require new ingress/egress doors, ADA compliancy as well as fire safety and a host of other 21st century codes all of which will double those figures. For new developments the issues are sometimes more onerous but less costly and therefore the costs can be better controlled. Get back to me if you would like to know more.

Dean Dalvit April 17, 2016 at 5:09 pm

Gary,
Thank you for your question. The data that we published here is available only for cities in the United States. The provider of the information, RS Means, very well may offer construction cost data for Mexico. I would suggest going to http://www.rsmeans.com and contacting someone there who may be able to help you. Domestically, Walmart type projects run between $100 and $130 per square foot, depending on location and details specific to each store. Whether Mexico City would be higher or lower than that range is beyond my expertise. I would suspect that the cost of labor may be lower, but the cost of materials and entitlements could offset that. Best of luck with your project!

Gary LaGassey April 17, 2016 at 9:56 am

Sirs,
I am an MBA student with the University of Maryland overseas campus at Aviano Air Base, Italy. Our class team is tasked with writing a project plan for design and construction of a Walmart type commercial store in Mexico City. We’ve searched all over for data concerning design and construction costs to no avail.
This doesn’t have to be fine science but we need to get close to a reasonable estimate of the project.
Would you be kind enough to point us in the right direction to obtain this information?
Thank you in advance for your assistance.
Sincerely,
Gary C. LaGassey (gary.c.lagassey@gmail.com)

Dean Dalvit December 16, 2015 at 3:56 pm

Tad,
A more complete analysis of construction costs per square foot for apartments can be found here:
http://evstudio.com/construction-cost-per-square-foot-for-multifamily-apartments-2012/ and here: http://evstudio.com/cost-per-square-foot-for-construction-for-8-to-24-story-apartment-buildings/ for various sizes of buildings. Note however that the RSMeans study is limited to locations in the continental US. However, in general, Honolulu costs generally rank similar to New York and San Francisco costs, so I would plan for the high 200′s per square foot as a starting point. EVstudio has a depth of expertise in multifamily design and we also have an affiliate in Honolulu. We would be happy to discuss your project with you and provide you with Architecture services for your project. Just let us know and we can arrange a meeting. Thanks!

Tadhg December 16, 2015 at 3:06 pm

How much is residential apartment high-rise construction cost per square foot in Honolulu?

Dean Dalvit December 12, 2015 at 10:39 am

Winston,
The RSMeans data is for new construction, so it isn’t readily applicable to renovation projects. However, EVstudio has extensive experience in commercial renovations and can provide a conceptual starting point for establishing a budget that would then need to be validated by design development and iterative pricing. There are a great many factors that can influence the costs of a renovation project, but if you are taking it to the core and shell, and replacing MEP systems, a median level of interior finish would likely land you in a cost range of $80-$130 per square foot. The trick is that you are working with a small square footage, so that will be highly price sensitive to large line item costs, like bringing in 3-phase. Intended use and level of finish are also highly influential to the cost, and without a schematic design and demo plan, can only be conservatively forecast. I’m assuming a professional class A level of office finish, but there can be substantial savings if the resulting space is a lower level of finish.

winston December 12, 2015 at 5:46 am

wanting to remodel an existing 3,500 sq ft brick office building in St Louis area. total inside gut with new ac/heat and taking 1 bath (small) and making 2 ada accessible bath rooms. it has a 200 am service panel now, would need to rewire as the build out goes, and add 3 phase which we have the bid on. Can you advise what our estimated projected planning cost per sq ft be?

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