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 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 Content
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.
Location
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. The 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.
Building Permits
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.
Building Quality
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
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.
Building Materials
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.
Building Type
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.
Source: BigRentz, October 6, 2023 | https://www.bigrentz.com/blog/commercial-construction-cost-per-square-foot
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