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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{ 26 comments… read them below or add one }

Dean Dalvit March 24, 2019 at 8:54 am

Hi Aly, thanks for your questions. There’s a tremendous number of variables here but I will try to answer as best as I can for you.
1. I’m not sure what you mean by “preferred”, but as far as construction cost per square foot, low rise is a less expensive construction type (Type V wood frame) than mid or high rise construction. Of course, your project yield in terms of unit count then becomes limited by things like surface parking and limited story height. A great link to another article I wrote about low rise wood frame apartments in Austin, TX can be found here: http://evstudio.com/construction-cost-per-square-foot-for-apartments-in-austin-texas/. I don’t have one for Fremont NE (or Omaha), but you can use indexing between the two cities to adjust for local economic indicators. See this link for the relative difference in construction cost per square foot between different cities. It was written some time ago, but is relevant to show the difference between cities and can be adjusted by indexing: http://evstudio.com/construction-cost-per-square-foot-for-multifamily-apartments-2012/
2. The answer to this question will depend entirely on the market study for your particular location and the renter demographics as well as comparative properties in the area. Typical walk-up garden style apartments provide surface parking only, or separate detached garage buildings or carports which can be rented separately. Larger apartment projects may provide parking under a podium below the building. What you are describing is less of an apartment model and more of a townhome model. Those are certainly in demand, but typically, you would see townhomes for sale and not rented as apartments due to the much lower unit count and challenges in management for such a low density development.
3. This will depend entirely on what kind of building you decide to build. See the answer to question 5 – the Denver market will be slightly higher than the Omaha market, and a fair amount higher than the Austin market, but the general differences are laid out in that article (see the link about relative differences in construction cost among cities in question 1 above).
4. The answer to this question is entirely based on your market study for the area you wish to build in. If there was a singular answer to this, then all housing across the US would be identical. But it isn’t for good reason – every market has many different variables that drive the right mix of housing necessary in any given economic environment. The best yield per cost/sq.ft. is going to be 3 story walkup apartments. At 3 stories, you do not require elevators or interior corridors like you do at 4 stories. And above 4 stories, you require a podium and/or additional fire separations between the lower and upper floors. Above 5 stories, you change construction type entirely to noncombustible, which drives cost per square foot significantly. With that said though, a 3 story walkup would be very inappropriate for a location like downtown Austin, where rents would easily support higher density and land is too expensive to surface park and build such a low density project. In the suburbs on the other hand like Round Rock or Pflugerville, then a walkup product would make a lot more sense where land basis is much lower. Fremont may be a similar situation as it is more of a suburb to Omaha.
5. Here is a link that helps to outline the difference in construction costs for various types of construction in MultiFamily developments: http://evstudio.com/construction-cost-per-square-foot-for-multifamily-housing-based-on-construction-type/. It should provide clarity to your question about construction costs for various types of construction. As far as rent recovery, that will completely be a function of location, absorption, demand, amenity and management – all things that are very important considerations, but have little to do with the construction of the building itself.

I hope all of this helps. We would love to learn more about your project in either location as we have had an office in Austin for years and have designed many projects in and around the Austin area. And our Denver office is a regional office that serves markets from North Dakota and Montana down to New Mexico North-South and Nevada to Nebraska East-West. We are a fully integrated Architecture and Engineering firm, which has unique advantages in multifamily design due to the importance of keeping all costs (including soft costs) low and the pressures of a fast tracked design timeline. Let me know if you would like to discuss your project further and explore how we may be able to serve you. Thanks!

ALY HASAN March 22, 2019 at 7:04 am

Hi Dean
Looking to do a multifamily project in Fremont, NE and or Austin, TX. Total project cost of approx 5M. To give you some idea of cost in NE….I did a strip center in NE last year and It cost me approx 89/sqft for Shell with all the parking lot etc.
1. Would like to know if low rises are preferred and if so…2 story or 3 or 4.
2. Detached garage or a attached garage town home style? What is successful & in demand currently?
3. What is the per sqft construction cost, excluding land.
4. Which building type mentioned in Question 1 or 2 offers the optimal mix of leasabilty and financial sense.
5. How much more does concrete exterior wall and concrete floor/roof slabs add to construction cost. AND is this recoverable in the form of higher rents?
Thank you.
Al

Dean Dalvit January 24, 2019 at 1:14 pm

Hi Mimi, thanks for your question. This data is from 2009, so adjusting for inflation, you would be looking at between $160 and $200 per square foot to build that product mix, depending on level of finish and a number of other factors. So that would result in a new construction cost of between $576,000 and $720,000 for typical level of construction and finish. I hope that helps!

Mimi January 24, 2019 at 11:21 am

I’m insuring a one story building that is 2500 sq ft retail clothing and 1100 sq ft apartment in the back. The retail store and apartment have a common wall. The building is located near downtown Los Angeles. Can you give me the cost per square foot to rebuild? Thank you.

Dean Dalvit October 15, 2018 at 8:15 am

Hi Bethany,
Thanks for your question. There is actually a post I’ve written specifically about construction cost for k-12 educational facilities that may be helpful. You can view that article here: http://evstudio.com/cost-per-square-foot-of-educational-facilities-by-region/
That post was written a while ago (2013), so you can anticipate that construction costs have risen anywhere from 10%-20% depending on construction type and location. Another article that I’ve written about for higher education classrooms can be found here: http://evstudio.com/construction-cost-per-square-foot-for-college-classrooms/. You can navigate the additional links at the bottom of those posts to find additional articles on college laboratories, student unions and other project types.
I hope that is helpful!
Dean

Bethany October 14, 2018 at 10:27 am

Hi Dean,

I was wondering if you could give me an idea of cost to build an education center in Toledo, Ohio. The facility would be similar to a library or museum in style. I’m currently putting together a business plan and looking at cost analysis. I appreciate your time.

Thanks,
Bethany

Dean Dalvit January 16, 2018 at 8:35 am

Vas,
Thank you for your question – it is a very good one. We are often asked how to adapt historical data to current budget expectations. The easiest method is to calculate cost increases based on an index. Many construction cost indexes are available on the Internet, and often they come in the form of a chart which simply shows what Today’s cost would be if the historical cost of some previous year was one dollar. In that example, you would simply multiply today’s indexed cost to the cost per square footage of that previous year. The other way to calculate it is to compute the rate of inflation expanded over the number of years from that historical data. For the US, the average rate of inflation generally hovers around 3%. So if construction cost per square foot in 2009 was $100 per square foot, then for 2017, we would take $100 X 1.03 ^ 8. This results in a 26.7% increase, or a construction cost of $126.68. Note that local economies can have a significant impact on that average rate of inflation (as they also do with construction costs in general). In very hot markets, the rate of inflation could run up much higher over an extended period of time. In the long run, up and down markets take that average back down to a moderate number, however we have seen a strong recovery since 2012, and some markets are posting double digit percentage increases in construction cost per year for a few years running. This data should be readily available for most markets, and you would simply take that percentage per year and calculate the projected cost per square foot as shown above. I hope that helps and thank you for your question.

Vas Shrinivas January 15, 2018 at 7:22 pm

Hello,
Cost per SFT of commercial building on the website is 2009 cost. How much has gone up in major cities since 2009? Is 20-25% more in 2017 is a safe assumption?

Dean Dalvit November 26, 2017 at 7:47 pm

Mahdi, thank you for your question. Industrial buildings in Austin Texas typically run between $100 and $120 a square foot depending on site considerations, construction type and building program including level of finish. EVstudio does have an office in Austin and a great deal of expertise with these types of buildings. We would be happy to speak with you further about your project and help you take the next steps with architecture and engineering design. Please let me know if you have made a selection on your design team and if not, we would love to set up a meeting and go from there. Please email us at design@evstudio.com or call us at 303-670-7242. Thank you

Mahdi Al Sallami November 25, 2017 at 9:06 pm

Hi,
I’m starting a feasibility study to build a 5000 sf industrial hall in Austin – Texas. Could you please give me a rough estimated cost ?

Thanks

Mahdi Al Sallami November 25, 2017 at 8:51 pm

Hi,
I want to know the expected cost of a covered building for industrial use in Austin – TX .
Thanks

Dean Dalvit October 30, 2017 at 5:28 am

Hi AJ,
Thanks for your questions. We provide A/E design for projects all over the country and even a few internationally as well, so Ft Lauderdale is well within our area of service. To answer your questions, we should start at another article I’ve written that is specifically about mid rise office building costs per square foot: http://evstudio.com/construction-cost-per-square-foot-for-office-buildings/
As you can see, the data suggests a turnkey cost of approximately $160/sq.ft. However, bear in mind that this article was written in 2012, so escalating that by the indexed growth will add nearly 20% and take you to a turnkey average cost of $192/sq.ft.. and given that’s an average, I’d say an acceptable range would be $185-$200/sq.ft.. Now, the core and shell of the building will represent approximately $120-$150 of that cost and the tenant finish will be in the neighborhood of $50-$80/sq.ft. Depending on a great many factors. Building efficiency and the amount of common area and amenities you have to finish as part of the core and shell as well as the level of finish for both the lobby areas as well as the tenant spaces for example will drive these numbers. Highly amenitized class AA and AAA buildings for example can easily run well above these averages. I hope this helps. If you would like to discuss further and program your project so you can get a better sense of scope and costs based on your specific project, please let me know and we can set up a time to talk. I can be reached at 303-670-7242 or design@evstudio.com. Thanks!

AJ October 29, 2017 at 5:40 am

Hi Dean, I read your email exchange with Brad in Fort Lauderdale. We are also in Fort Lauderdale. Do you have representation here? Similar to Brad’s planning, I am planning to build a mixed use building that will initially build out for my office needs, which by completion (2019) will be 20k sf. When tenants inquire, we would build out with their lease agreements. I understand from your article and various responses that we would be in the range of $150sf for the area that is completed. I am not clear on what the cost would be for the unfinished areas. In a perfect world I will be able to build 6-8 floors at roughly 150ft / 100ft, including one or two levels of under building parking. The immediate question is what it costs for unfinished open footage? thanks so much, AJ

Dean Dalvit June 9, 2017 at 6:06 am

Understood Michael,
Our construction cost information is based on RSMeans data along with past project data on projects that we’ve been involved with. I don’t have any examples of projects that specific to your use or location. I would suggest reaching out to other contractors in the area who have worked on similar projects and see if they will share that information with you. Good luck and if you are in need of a world class A/E design team to help you with the design, please let us know. Thanks!

Michael Tomczak June 9, 2017 at 5:49 am

thanks, but I am trying to find some reference material on recently completed Casinos in the general vacinity of this property. I have costs per Sq Ft for the contractor and need 2 comparibles

Dean Dalvit June 9, 2017 at 4:44 am

Michael,
I’m certain we can help. In rough numbers, you should be able to use $200/sq.ft. as a starting point for an average across all product types. Then adjust up or down based on factors such as level of finish, complexity, etc.. if you can send us your plans to design@evstudio.com, we’d be happy to review them and give you a more refined estimate of construction cost. If you don’t have plans yet, we’d be happy to work with you on developing everything from initial concepts to full permit drawings that are designed to meet your budget. Just let us know how we can help. Thanks!

Michael Tomczak June 8, 2017 at 1:01 pm

Hi
Doing a plan and cost review of a Casino expansion in Gulfport Mississippi. I am having trouble digging up cost breakdowns for this type of facility. Any suggestions of where I would start my search?

Dean Dalvit May 17, 2017 at 4:46 am

Steven,
While I have not written an article about construction costs for this project type, we do have experience with this product and your range of $100-$110 per square foot for the Chicago area should be reasonably accurate for a starting point in your pro forma. The cost is more or less depending on the location in the country, and the Chicago area tends to run a bit higher than the median. Best of luck with your project and if you need any architectural or engineering resources, please let us know. Thanks!

Steven May 16, 2017 at 11:59 am

Dean,

I’m working on a cost analysis for a client who wants to build a one-story, 40,000 SF pre-cast concrete panel warehouse/manufacturing plant. It would be located in west suburban Chicago. Not including site work I’m finding the costs to be in the range between $100 and $110 per square foot. I could not find any data on your website regarding this building type. Can you confirm that I am in the right “Ballpark” with this range?

Dean Dalvit April 26, 2017 at 7:25 am

Francisco,
Thanks for your question. There are two other posts that you may find helpful for your project. One discusses various project characteristics within MultiFamily and Mixed Use and their associated costs: http://evstudio.com/construction-cost-per-square-foot-for-multifamily-housing-based-on-construction-type/. The other is a bit older, but outlines the cost per square foot for multifamily projects by region at the time: http://evstudio.com/construction-cost-per-square-foot-for-multifamily-apartments-2012/. Note that data from 2012 must be indexed based on inflation and growth to properly adjust for today’s dollars (approximately 1.15X total over the last 5 years for the US aggregate, but an index should be specific to your location for better accuracy).

Without knowing certain cost driving characteristics of your project like level of finish, level of complexity, type of construction, issues specific to the site or location, it’s difficult to give you any certainty on an actual budget. However, if you were to plan for the median type of product in your location, I think a range of $180-$220 per square foot with a median of $200 would be a reasonable starting point.

As for a parking structure, above grade costs can range from $15k-$30k per parking space depending on many factors from construction type, location, design of garage and adjacency to other structures. Going below grade would definitely be towards the higher end of that, and in some cases higher depending on subsurface conditions, water table, etc..

Your design team should use your pro forma budget requirements to design within the construction cost range you are targeting. Unfortunately, not all designers are well trained to do that. EVstudio does have an affiliate in California and would be happy to discuss how we can help you with the design of your project to meet your design and budget goals. Just let us know how we can help!

Francisco L April 26, 2017 at 6:11 am

Good morning Dean.
I’m planing to build a 3 story multi use building in San Diego CA, with 4 commercial units on the bottom floor and 6 residential units on the second and 3rd floor with one elevator, for a total of 16 units, totaling 16,000.00 SQ Foot of building area, with a 20 space parking lot, (new construction on a flat land) do you think a $200.00 per square foot will take me there? and if I want to build a basement parking structure what cost I’m I looking at for that additional build? Appreciate your input.
Thank you

Dean Dalvit April 3, 2017 at 4:31 am

Bill,
Thanks for reaching out. For a strip mall as you described in the Benson area, I would expect base building construction costs to be in the range of $70-$120 per square foot range. As you outlined, strip retail is typically core and shell build-out with tenants largely handling their own finish out, so this cost range does not include tenant finish costs. Depending on your target tenant profile, many factors of course would apply as the building exterior can be designed to attract a high-end boutique tenant, or an economy tenant, but should be consistent for your brand. We have a great deal of experience with retail strip design and can provide a convenient streamlined one stop shop for all of the Architecture and Engineering required for permitting and construction of your project. If you would like a proposal for design services for this project, please let me know and we can arrange an initial meeting to discuss further. Thanks!

Dean Dalvit April 3, 2017 at 4:25 am

Nick,
Thanks for reaching out. For single story vanilla shell as you described in the San Diego area, I would expect base building construction costs to be in the range of $100-$140 per square foot – many factors of course would apply. We have a great deal of experience with retail and convenience restaurant design and can provide a convenient streamlined one stop shop for all of the Architecture and Engineering required for permitting and construction of your projects. If you would like a proposal for design services for a specific project, or a master services agreement for multiple projects, please let me know and we can arrange an initial meeting to discuss further. Thanks!

Dean Dalvit April 3, 2017 at 4:12 am

Mariam,
Thanks for your question. If I understand you correctly, you’re looking for a soft cost estimate for the design and engineering for this project. Without a detailed program, we would start with a ballpark, then refine from there. New construction A/E costs can generally run 5%-7% of estimated construction cost. However, additions can get messy depending on the nature of the existing conditions and depending on the level of renovation/reuse as well as the level of finish and detail, and therefore could be as high as 10%. This would be for Architecture, Structural, Mechanical, Electrical, Plumbing and Civil Engineering for the complete permit and construction package. We provide all of these disciplines in-house, and have a great depth of experience with banquet halls and entertainment/hospitality design. If you would like a more formal proposal, please let me know and we can arrange an initial meeting to discuss the project further in more detail. Thanks!

Mariam March 31, 2017 at 11:30 am

Hello ,
desire to do a Demolition and 33,000 SF Additions to an existing banquet hall in NJ area close proximity with NY including the cost for New HVAC equipment 220Tons total , ducts ,bathroom , kitchen areaet.c. which we have the bid on Can you please give me an idea what is estimated projected planning cost per sq ft be?
Thank you

Nick March 30, 2017 at 12:42 pm

Hi Dean,
Thanks for sharing those graphs and estimates. Very interesting. What’s your take on current building costs for vanilla shell condition buildings ranging 3000 sqft to 6000 sqft in San Diego? Retail/Food or drive through places predominately.
Thanks a lot in advance.
Nick

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