Price Per Square Foot Construction Cost for Multi Story Office Buildings

by Dean Dalvit on July 14, 2011

Time again to look at the current construction market activity and analyze construction costs per square foot for various types of office buildings. How much does it cost to build an office building? Below is some data from RSMeans construction cost data that we keep a close eye on in order to estimate construction costs for all of our office building projects. This data is sorted by region from the most expensive to the least expensive.

price per square foot construction cost for two to four story office building

For the most common office building size, two to four stories tall, the range is from just over $130 per square foot in Winston-Salem to over $230 per square foot in New York. The spread here is largely due to the local cost of labor and regulations that allow various construction types that are allowed in low rise construction. For example, in some cases where wood frame construction is still allowed, depending on location and occupancy, this would help to keep costs lower. In areas that are restricted to non-flammable construction, price per square foot will go up.

By taking advantage of savings provided by vertical construction, you will see approximately a 4% savings in cost per square foot by increasing the stories to between five and ten stories. While one might expect a larger savings for that economy of scale, several new requirements come with the mid-rise building that are often not dealt with on the low rise buildings. For example, elevator shafts and service corridors get more complicated as well as HVAC systems.

Price per square foot construction cost for five to ten story office building

The geographic spread in cost per square foot is identical to the low-rise data. This is still principally driven by local factors such as labor costs and local regulatory requirements.

Finally, the high rise buildings see the most economic cost per square foot. For buildings between eleven and twenty stories tall, there is approximately an 11% savings over the mid rise buildings and 15% over low rise. this is largely due to the fact that similar elevator, HVAC and service equipment requirements are required for mid and high rise, resulting in more economy of scale for going up.

price per square foot construction cost for eleven to twenty story office building

Again, the geographic spread is still the same, telling us that the cost per square foot is very sensitive to geographic location. Note that over twenty stories starts getting into more unique building characteristics that will drive costs in various ways. For more information on estimating the cost of your office building during the early planning stages, contact any of us here at EVstudio and we can help scope the right size project for your pro forma.

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{ 24 comments… read them below or add one }

Dean Dalvit November 20, 2011 at 6:05 pm

Travis,

Thank you for your inquiry. We have actually worked on a similar program for a baptist congregation in Denver, and we also have two mixed use projects for the Christian House of Prayer currently under construction in central Texas, so we’re very familiar with the project type.

Assuming that rework and remodel scope to the existing space is minimal, you should be able to safely budget between $160 and $180 per square foot as a starting point. So, for a 24,000 sq.ft. Steel two story addition with a brick exterior and reasonably nice finishes on par with a church facility, you would be looking at between $3.8M and $4.3M. This would be complete and turn-key with the exception of furnishings. Be aware, however, that an addition of that size will affect the site and increase the occupant load of the existing building. The result may be additional parking requirements, augmenting the restroom facilities, looking at egress (halls, elevators, sprinkling) and a host of other requirements from your jurisdiction.

We have experience with this project type, and would be happy to discuss your program with you. We can provide everything from schematic designs to permit ready construction documents with all of the required engineering for religious facilities throughout the country. Once the site and program can be worked out at a conceptual level, budget estimations can get considerably more accurate.

Let me know if you would like to discuss your project further and we would be happy to help. Thanks!

-Dean

Travis November 20, 2011 at 4:32 pm

We are in the preliminary stages of submitting costs to obtain a grant to build a daycare/religious education center for our church. What do you think the average SF cost would for for our building?

12,000 SF per floor (2 story)
Structural steel frame
Brick exterior to match church and surrounding area
Classrooms/daycare on first floor
Large open reception hall and kitchen on second floor

This project is located in SE Indiana near Cincinnati. Any help would be appreciated.

Thanks!

Dean Dalvit November 18, 2011 at 10:36 am

RE,

This sounds like an aggressive project, and I would highly encourage you to work with a development consultant. I will e-mail you separately with the group that we work with and hopefully they can assist you on your budget breakdowns. We would be very interested in speaking with you about your architectural and engineering needs for the project.

-Dean

RE Henderson November 18, 2011 at 9:27 am

Dean:

Great responses and information you have provided. I need your assistance in laying out a construction development budget.
I have an estimate total budget cost of around 400 million but need to break down the specifics for the investors. I have researched budget templates online but don’t know which one is the best to utilize. The development is a multi-use development. I look forward to receiving your feedback.

regards,

RE

Dean Dalvit November 7, 2011 at 8:08 am

Dante,

Unfortunately, neither I nor RSMeans (the source of my data) have any information on operating costs for buildings. This would obviously be highly variable anyway given the management, design of the building (netzero, etc.) and intended use of the facility. That would best be handled by breaking down a line item pro forma for all of your operating costs and would be very specific to your project.

During design, we typically have many discussions about these very issues and make design decisions based on a life-cycle cost, which includes operating costs, as opposed to an initial cost. The result is that most of this information is vetted out in the design process.

Best of luck with the project, and if we can help you in any way on the design side, please let me know. Thanks!

-Dean

Edmund Dantes Hamilton November 4, 2011 at 11:01 am

Dean, thanks for all of your assistance. Is there any resource online that can provide a cost estimate of operating a 2-4 story building, say after it is constructed. Sorta like a operating costs guide that takes into account all the general expenses and taxes due on the structure, monthly quarterly annually?

Your per square foot estimate provide build costs. Where can I find estimates on operational costs? Hope that’s not asking too much but I am trying to get an idea of the numbers involved so I can pitch my project for financing to an investment banker and the state of illinois venture fund.

Dante

Dean Dalvit November 3, 2011 at 2:01 pm

Ilkka,

Thanks for your question. To date, we don’t actually have any current data from RSMeans for buildings over 24 stories. However, the general rule is that there is a continued cost savings due to economies of scale up to about 80 stories. At that point, vertical circulation and other building systems start to dominate the cost of construction and cost per square foot begins to climb. I also don’t have any data for regional construction costs in other parts of the world, but we would expect the same relationship between number of stories and construction cost in any market.
-Dean

Ilkka Korpi November 2, 2011 at 9:36 pm

Hi Dean,
what You write about what happens to costs up to 24 stories is interesting. Now, what happens between 24 and 40? Most of all: foundation, core and structure, facade, stabitity extra cost, elevators & other safety measures, HVAC? How do these costs per br-sqft (or sqm) vary. Another thing is the percent of net leasable area (the efficiency), but I’d like to focus on the brutto cost first. Thank You!
Best regards,
Ilkka Korpi,
Helsinki, Finland

Dean Dalvit October 18, 2011 at 6:03 pm

Hi Dante,

Thanks for your inquiry. I would definitely advise you to start with a conservative budget, then qualify it as you develop the design. For the Chicago area, you are correct, right around $200/sq.ft. is the “average” cost per square foot. This is based on the average for the costs across many line items for many buildings. You mentioned modern design, and often with that comes a premium, depending on design features and finishes. To be conservative, you should plan on a 10%-20% premium for higher end modern finishes, or other elements that lend themselves to the modern appeal (that may also offer sustainable benefits as well). So, with that said, you could be as high as $220-$240/square foot. Of course, “modern” carries a lot of definitions, and sometimes, a stark, industrial look can achieve a modern aesthetic and be afforded at a discount, yielding perhaps $190/sq.ft. Those finishes will close the gap between.

I hope that helps! We hold licenses in architecture and engineering in several states across the country, and have done projects in Illinois. If you would like to discuss your project further, let me know and we can certainly help out with everything from front end programming and conceptual design to final permit ready construction documents.

-Dean

Edmund Dantes Hamilton October 18, 2011 at 9:10 am

Hi Dean,

I’m an entrepreneur with a dream and a plan (no money but working on that). I used RS Means to price out a concept building I want to either build or renovate an existing building.

Just curious if I should use the $201.18 per sf rate in the above chart to build out a 2-4 story modernist type digital printing, training and corp office for my company here in Chicago. I know there are land costs, etc.

The drawing in the website is just a draft concept. I have a location in mind but no property, etc.

Thanks for publishing your blog!

Dante

Dean Dalvit October 13, 2011 at 2:46 pm

Brian, what is it you would like to build?

brian herndon October 13, 2011 at 10:29 am

Hi Dean –

How much additional per square foot cost would be added to build in a remote area of Texas (Laredo)? Thanks

Brian

Dean Dalvit October 12, 2011 at 12:29 pm

Edgar,

Could you give us some information on the systems you are inquiring about? You’re sort of asking “how long is a piece of string”.
Would need to know your location, the building type, the building size, stories, etc. and some information on level of finish, extent and function of various systems.

-Dean

edgar almeida October 11, 2011 at 7:16 am

what would be the approximate costs (products + installing and commissioning) per sq.ft. for office building systems like :

HVAC
Lighting
Power

Dean Dalvit May 2, 2011 at 2:04 pm

Ahmed,
Thanks for your comment. From what you described, you will likely be between $150 and $200 per square foot, if the location is in fact, in Texas. As you can see from the post, regional differences can be significant, and skew the data. You can also see our post on Hotels and Motels here: http://evstudio.info/construction-cost-per-square-foot-for-hotels-motels-and-apartments/. It does not cover up to 14 stories, but it will give you a sense of the industry for up to 7 stories. Couple that with this post for multi story construction, and you will find that the cost per square foot goes down with more stories. I conservatively would add in another 25-30% because you described the project as a high-end project. Obviously, you could spend significantly more yet, depending on finishes, but at that point, it would be better to program the project in more detail to better understand the cost drivers. If you would like to discuss the programming or design of your project, let me know and we would be happy to work with you.

Ahmad bayat April 28, 2011 at 3:52 am

Dear Dean Dalvit
I know you from your friendly advises on construction cost per square foot for hotels.
I enjoyed your compassionate help to people they need clear answers I also would like to ask you that how much would be construction cost of a 5 star hotel in a dry area like Texas.
The hotel is steel structure, 14 story, and the total area of the construction 15,000 square. I would be appreciated if you could help me to know about rough estimate of construction cost per square feet on a EPC contract and turn-key completed including furniture.
Best Regards.
Ahmad bayat.

Dean Dalvit March 3, 2011 at 1:13 pm

Hi Dan, Thanks for your comment. While the basis equity amount in the current building, and the market conditions in your area play heavily into the economics of the pro forma, you are generally correct in that 40 floors would certainly be less per square foot to build new than a mid-rise building of the size you currently have. The existing building sounds like it is limited in its ability to remodel cost effectively, and that expanding upward may be infeasible based on current design and structural systems. It is always a challenging decision when it comes to demolishing a building to build higher and better, and it would require a good bit of analysis to demonstrate that the delta between the value of square footage in your location and the cost to build it is great enough to make it a sound investment of development dollars. However, this is exactly how our cities are built over time and when the old buildings have lived their useful life and are no longer economically viable, new buildings replace them.

-Dean

Dan March 2, 2011 at 9:28 am

Hey,
I own a condo in Chicago. The building is in a prime location. The property is having trouble maintaining value because of market conditions and poor initial design that causes unfavorable opinions. The thing is, we own an additional 2800sf of air rights. The garage only goes up 2 floors, so above that would be available. If you times that by 40 floors, that would be considerable. So, my question is; Economy of scale tells me that we can start from sratch and build higher with more space per unit. I am wondering if this would make sense for a developer? Right now it is a 19 story midrise that was built in the 70′s. A much more modern design would bring a higher per square foot price because of the ideal location (me thinks). I am hoping that a residential building of 40 floors would be a little cheaper per square foot, is that safe to assume? I am trying to do the math to see if something like this is viable. I would think the condo board might take a closer look if I could prove that it might be worth doing.
Thanks,
Dan

Dean Dalvit February 11, 2011 at 8:31 am

Hi Zach, Thanks for your comment. These figures are for Hard costs only. In a pro forma, the soft costs will have to be in addition, as well as land costs, financing, etc.. If you are looking into a project, we would be happy to discuss it more with you. Thanks!

Zach February 9, 2011 at 3:28 pm

Are these hard costs only or hard+soft?

Sean O'Hara January 27, 2011 at 12:29 pm

I’m not sure that I can agree on the profit that you’re laying out there, but I appreciate the notes on cost items.

Roxy van Roxas January 27, 2011 at 10:23 am

Dear Jose: There are other architectural issues that push the price per sq ft higher, but don’t forget the construction firm owners and their associates (e.g., civil engineers, mechanical engineers, concrete chemists, accountants, lawyers, etc.) need to net (e.g., after income taxes) a minimum of 60% profit, otherwise, they cannot stay in business.
Specific other issues for medical buildings:
-special permits and design requirements for medical and lab needs
-need for an elevator — very expensive to construct and permit
-disabled access (e.g., ramps for wheelchairs, gurneys, wider doors, emergency room access and exits)
-x-ray room construction requirements
-fire overhead sprinkler systems
-larger laundry rooms
-delays cause increase in repayment with compounded interest on the loans, due to fire marshal and other departmental permit processing and inspections
-need for structural stability stress tests for earthquakes, etc.
-if federal or state funds are used, usually there is a requirement to hire union workers and pay union wages

Dean Dalvit April 8, 2010 at 12:50 pm

Hello Jose,

The construction cost per square foot is the direct costs for the building inistial construction, from the foundation to the roof, and including interior finishes, but not movable furniture, fixtures or other equipment that have no permanent connection to the structure of the building or utilities. So if the total costs to build a 10,000 square foot building was $2,000,000, then the cost per square foot would be $200 per square foot.

Operations costs are entirely different expenses, but are also often expressed in terms of square feet. These are annual expenses necessary to run the building. Typical operating costs will include maintenance costs, common utility costs, insurance, security, trash removal, property taxes and any other operating expenses that the building may have. If the total annual expenses for that same 10,000 square foot building was $60,000, then the operating cost would be $6 per square foot (per year). These costs fluctuate from year to year and are typically passed on to tenants in a triple net lease. It is important to understand these costs in a rental scenario as they are added to the base rent (which is also expressed in terms of square feet) to get to a total gross rent figure.

Jose Rojas April 5, 2010 at 12:26 pm

Dear Sirs

Could you please tell me what’s the difference between “price per sq.ft construction”? And “price per sq.ft operations” in medical plaza buildings?

Thanks

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