BANNER - Commercial Construction Costs

Commercial Construction Costs Per Square Foot 2019

Article Highlights: 

Defining what is commercial construction

Commercial Construction costs based on the type of building and materials

Commercial Property Industry data: US Facts and Statistics

Key tips for your next commercial construction project


Commercial construction often requires larger, more extensive and expensive equipment. Commercial construction costs are difficult to determine per square foot due to outside variables and factors. There are no two identical buildings. Therefore the differences in requirements will affect the commercial construction costs. Each structure and building has different purposes and intended functions.


Applications differ in size, weight, and quality, so these factors fluctuate the cost of construction. When estimating commercial construction costs, it is important to gather data for the project by doing preliminary research. In the estimation of a commercial construction cost, it would include the type of building you are looking to build, the location, based on the local economy. Commercial construction costs per square foot vary significantly with location. Before we get started, let’s go into more detail on what commercial construction is.


Construction materials
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What is Commercial Construction?

Commercial construction often requires larger and more expensive equipment because these buildings can be anything from offices and manufacturing plants to medical centers and retail shopping centers. In terms of employment, labor demand is high in 2019 due to labor shortage. The shortage of skilled labor may increase construction expenditures. In commercial construction, a project can be separated into three sizes: small-scale, medium-scale, and large-scale.


Small-scale: buildings that focus on changing the look of a structure, or also known as rebranding. Small scale commercial construction is seen as projects that update the interior design.


Medium-scale: Buildings grow old, companies hire more employees, and extra facilities need to be made. Medium-scale commercial construction occurs when companies want to update, remodel, or expand parts of their building. 


Large-scale: unlike the other scales, large-scale commercial construction projects have no previous structure to start with. Large-scale projects are structures such as high-rise buildings, dams, and warehouses.


cost of materials
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Costs Based on the Type of Building & Materials

It’s important to understand that not all types of construction cost the same value per square foot; it varies based on location throughout the United States. For basic structures, the commercial construction costs are composed of building shape, design elements, floor area, materials & supplies used, and overall quality. Typically, larger buildings cost less per square foot than smaller buildings. For a single-story office building, the median range in construction costs is $160-$170 per square foot.


Convenience stores and mall structures are less expensive because of their simplistic architecture compared to other building types. The commercial construction cost for these types of buildings is approximately $100 per square foot. Restaurants, specifically fast-food restaurants, are increasing in costs due to the recent fast-food trends incorporating the boutique experience. Kitchen expenses rack up prices for construction costs to a median of approximately $200 per square foot. 


In terms of location-specific expenses, the climate is an important factor to keep in mind. For instance, in colder climates, a building needs to be engineered specifically so it can handle large amounts of snow. Additionally, different areas are more expensive than others. New York wears the crown for being the most expensive city in the US to construct any building: commercial or residential. 


Commercial Construction
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Commercial Property: US Facts and Statistics

The US Commercial Property sector composes of these following key factors: amusement, industrial, lodging, office, and retail. According to Statista, in the US, the value of private office construction starts amounted to 8.12 Billion US dollars in the first half of 2019. Since 2010, the commercial construction industry is steadily expanding. In 2018, approximately 89.52 billion US dollars of commercial buildings were built. Due to vacancy rates in industrial and retail real estate, there is a declining trend. The projection of retail vacancy rate for 2019-2020 is 13.9% and the industrial vacancy rate is 6.5%.”


Tips for Your Next Commercial Construction Project


For Manufacturers,

Manufacturers commonly sell to the public. By this, you don’t have to hire a mediator. The manufacturer only builds and makes the building; they will not assemble it for you. It might be beneficial to work directly with a designer to customize your building according to your requirements, demands, and wishes. Depending on the manufacturer, insulation services may or may not be provided, but commonly, the foundation is not provided.


For Brokers,

They can research the manufacturers, then negotiate on your behalf for the best price, and finally, take care by buying the building and scheduling the delivery. Though, you are still held responsible for the building’s foundation and installation. 


For General Contractors, 

They have their preferred manufacturer or broker that they want to work with. General contractors arrange the assembly, purchase, and delivery, as noted in their contract with you. Sometimes, the markup on the building will be a portion of their bill to you. Though working with a GC will increase productivity and be the most convenient way to get the job finished, it may not be the most cost-effective means.


modular construction
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Modular Construction: Technology is booming in the construction industry. With today’s environmentally-friendly approaches, companies are going green in commercial construction. Modular construction goes hand-in-hand with prefabricated components of buildings, which are built off-site in a different location, then transported and assembled on-site. The benefits of prefabrication are the reduction of site disruption and productivity. A modular office building made from steel structures costs approximately $55 to $60 per square foot with installation. Ultimately, modular buildings can be less expensive.


Key Takeaways in Understanding Commercial Construction Costs

Buildings vary in different sizes, qualities, purposes, etc. Commercial construction costs per square foot are influenced by the variance of building materials. In terms of employment, labor is highly demanded in 2019 due to labor shortage. The shortage of skilled labor may also affect construction expenditures.