Location, permits, quality labor, finishes and materials are only a few of the factors that impact the cost of commercial construction in the United States. The average cost of commercial construction per square foot in the U.S. is $490.
Commercial construction projects come with a high price tag, and companies that take them on must have a clear cost estimate before getting started. Building type, labor and materials are just a few of the factors that can affect the total cost, and a building’s location has more of an impact than you might think.
The average commercial construction cost in the United States is around $490 per square foot. However, the price can range from as little as $70 to over $1,000, depending on the building type and location.
To give you a better idea of how much you can expect to spend on a commercial project, we’ll go over the most common types of commercial buildings and break down the average cost in the western, eastern, midwest and southern U.S. Table of Contents
Table of Contents
- Factors That Affect Commercial Construction Cost
- Commercial Construction Cost by Building Type
- Commercial Construction Cost By Region
- How To Estimate Project Costs
- How To Save on Commercial Construction Costs
Factors That Affect Commercial Construction Costs
Companies and contractors must consider a variety of factors when determining the actual construction costs for their projects. The following factors play a role in determining the total cost per square foot.
Geographic location is one of the biggest factors impacting construction costs. Areas where living and working are in high demand — think Los Angeles or New York City — are generally more expensive to build in due to limited space. Location also impacts total labor costs. Since these highly populated areas have a higher cost of living, those who work on the project will need to make more than someone working on a construction site in a small to midsize town.
Permits typically account for less than 3% of the total construction cost for commercial projects, but they are still a necessary factor in your budget. The amount you can expect to pay for a commercial building permit will depend on the city you’re building in, so be sure to check the local laws and regulations in advance.
Commercial buildings can have varying quality standards that help determine construction costs. Higher-quality buildings with top-tier fixtures, amenities and mechanical systems fall under class A quality standards and are the most expensive to build. Buildings falling under class B or C, on the other hand, cost less to build but offer fewer modern fixtures and amenities.
Labor costs play an important role in determining the total cost per square foot and can account for up to 40 percent of a project’s budget. These costs include the wages, taxes, benefits and training of skilled workers. These costs may also vary depending on how labor-intensive the work is. The project timeline and cost of living in the area can also impact labor costs
Decoration and Finishes
Finishes can quickly raise a project’s budget. When calculating a commercial project’s total cost, contractors must account for interior and exterior finishes, including lighting fixtures, insulation, flooring, ornamentation, appliances and other decorative elements.
HVAC and Electrical Systems
A building’s HVAC, plumbing and electrical systems make up a large portion of a project’s total cost. To make installing these systems more cost-effective, designers can work with mechanical and electrical contractors to choose the most functional and energy-efficient options.
The total cost can change based on the types of building materials chosen for the project. For example, a modular construction project will cost significantly less to build than a structure requiring unique, highly fabricated steel. Building in warmer climates and using recycled or eco-friendly materials can also help reduce project costs.
Buildings come in all different shapes and sizes. It may go without saying, but larger buildings such as skyscrapers, universities and hospitals are often more expensive to build than smaller ones. The larger the building, the more engineering planning, labor, time, materials and safety features there are. These additional costs must be taken into account when building such structures.
Commercial Construction Cost by Building Type
Speaking of building types, the following data from Cummings Construction Market Analysis breaks down the average cost per square foot by these nine types of commercial buildings in the United States.
|Average Cost To Construct a Commercial Building in the US
|Average Cost per Square Foot
|Museums and entertainment
The average construction cost per square foot for commercial buildings varies depending on the type and size of the structure. Let’s take a closer look at each of these building types and costs.
The average construction cost for commercial office buildings varies depending on the size and number of floors. The average cost is $313 per square foot for a single-story office building, $562 for a mid-rise and $660 for a high-rise in the U.S. Multiple factors cause the price to increase for multi-story offices, including more expensive building materials, stricter building codes and higher labor costs.
The average cost for manufacturing facilities varies widely depending on their intended use. For example, regional distribution warehouses average $209 per square foot, while technology laboratories average $635. A building that requires advanced electrical or safety systems comes with additional labor and material costs.
Schools and Universities
School and university buildings are a cornerstone in most communities, so it’s important to know how much they cost to build. The average cost for elementary through high school buildings ranges from $295 to $359 per square foot. University buildings, on the other hand, can vary a bit more based on building type.
The average costs for university buildings include:
- Dorms: $322/sq. foot
- Classroom Buildings: $580/sq. foot
- Administrative Buildings: $596/sq. foot
- Laboratory Buildings: $765/sq. foot
Hospitals and Healthcare Facilities
Hospitals, primary care clinics and other healthcare facilities are a crucial part of every city, and more are being constructed every day. These types of buildings tend to cost more on average due to their specialized nature.
Here’s the average breakdown for healthcare facilities:
- Medical clinics or offices: $498/sq. foot
- Specialty Clinics: $619/sq foot
- Acute Care Facilities: $888/sq. foot
Public Spaces and Community Buildings
Public commercial structures can include a variety of building types, including police stations, museums, government administrative buildings and recreational facilities. Museums and performing arts buildings cost the most on average at $892 per square foot, while other types of community buildings average around $525.
Shopping Centers and Parking Structures
Regional malls and strip malls fall into the middle of the price range for commercial projects, costing an average of $537 and $371 per square foot to build. However, many of these structures require additional parking structures to accommodate high volumes of customers. Underground multi-level parking garages cost an additional $143 per square foot on average, and above-ground parking lots cost around $71.
Commercial Construction Cost by Region
A building’s location is an important factor in determining the total construction cost. To calculate the average cost per square foot in each U.S. region, we compared rates from several major cities and found the average cost for the five most common commercial building types.
|Average Commercial Construction Cost per Square Foot by Region
Commercial construction costs in cities like San Francisco, San Diego, Las Vegas, Seattle, Portland, Sacramento and Honolulu are higher than anywhere else in the country. The western U.S. is known for its coastal urban centers and eco-friendly structures, resulting in building costs that average $539 per square foot.
In the Western US, medical centers are the most expensive to build at $742 per square foot, followed by community buildings at $657, office buildings at $511, retail spaces at $407 and schools at $379.
Commercial construction projects cost around $459 per square foot in Chicago, Denver and Nashville. The actual cost for other locations in the Midwest can vary due to the region’s vast climate differences, but the averages from its major cities provide a good starting point.
Schools are the most cost-effective commercial structures to build in the Midwest, averaging $266 per square foot. They are followed by retail spaces at $388, office buildings at $465, medical centers at $581 and community buildings at $593.
If you are looking for a cost-effective place to construct a commercial building, the southern U.S. is the place to do it. The average cost per square foot is only $413 in Atlanta, Dallas, Miami and Orlando, and the warmer climate typically reduces overall construction time.
In the southern U.S., schools cost around $238 per square foot, retail spaces cost $336, office buildings cost $461, community buildings cost $513 and medical centers cost $521.
Commercial construction costs are slightly lower in the Eastern U.S., but they are still above the national average at $523 per square foot. This region includes Washington D.C., Philadelphia, New York, Boston and Raleigh-Durham — five metro areas that are traditionally expensive to build in.
In the Eastern U.S., medical centers cost around $720 per square foot, community buildings cost $648, office buildings cost $518, retail spaces cost $424 and schools cost $349.
How To Estimate Project Costs
Creating a budget for commercial building projects takes a lot of time and careful planning. The above estimates are a great place to start, but you’ll need to work with a contractor, engineer and designer to determine your project’s exact cost per square foot. Professional estimators are a great resource for companies taking on large-scale projects.
If you need help determining your project’s budget, consider creating a construction estimate and getting quotes from multiple contractors and suppliers. Whether you want to renovate an existing commercial building or build one from the ground up, estimating the commercial construction cost per square foot ahead of time can save your project from unexpected expenses later on.
How To Save on Commercial Construction Costs
For many, saving money on a commercial project is essential yet difficult. Here are four ways to potentially save money on a construction project while maintaining safety and quality.
1. Value Engineering
Value engineering is a process that focuses on improving the functionality of a product while keeping costs low. For example, a project plan might suggest using certain processes and materials, but after a value analysis, you might find that you can use a more straightforward process and less expensive materials and still achieve the same result — cutting costs in the process.
Value engineering is essentially finding the balance between functionality and cost and encourages innovation throughout projects.
2. Sustainable Construction
Using sustainable construction materials and practices may save on costs in the long run.
Some examples of sustainable construction practices that can cut costs may include:
- Buying and using recycled materials
- Emphasizing durability
- Using energy efficient systems
- Reducing water waste by using water-saving technologies
- Adding energy efficient windows
Some of these practices may require a higher upfront cost, but they will likely save the project owner from future costs while benefiting the environment.
3. Bulk Purchasing
Purchasing materials in bulk can save money and time on a commercial construction project. Often, materials suppliers will offer large discounts on larger purchases. Instead of purchasing the same material multiple times throughout a project, bulk order all of it at the beginning of the project when possible.
4. Renting Equipment
When a construction project requires specialized equipment, buying can get incredibly expensive. Instead of purchasing a new piece of equipment for one project, consider renting the equipment from a reliable construction rental company. Renting equipment can help you save time and money and gives the team access to top-of-the-line equipment with a lower price tag.
When renting equipment for a project, don’t rent with just anyone. BigRentz has a wide selection of quality construction equipment, so you can find the right equipment every time. From earthmoving equipment to dumpster rentals and storage, BigRentz makes equipment rentals convenient with our delivery and pick up in all 50 states.
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