Building Costs per Square Foot in the United States in 2022

Building Commercial Construction Cost

Commercial construction can be profitable, but it is not for the faint of heart. Companies in the commercial sector must have enough cash on hand or have quick access to a solid credit line. Contractors must focus on their building cost per square foot because commercial development is cash-hungry and infamously hesitant to pay.

Contractors can replenish their cash reserves with a solid profit when the project is completed by limiting expenses with effective forecasting and keeping an eye on the budget. A commercial project’s cost per square foot might vary significantly from one to the next.

This is especially true when comparing the costs of commercial projects in various parts of the country and different types of commercial buildings. Let’s look at the average price per square foot in commercial construction and see how much it varies based on the project and area.


Various Kinds of Commercial Buildings

Commercial construction encompasses a diverse range of structures. Commercial construction can be defined as practically any project that isn’t solely residential. Office buildings, malls, schools and universities, sports stadiums, hotels, entertainment venues, and parking structures are all examples of commercial constructions.

Most residential apartment complexes are classified as commercial ventures. In most states, residential projects are defined as single or multi-family structures with fewer than three or four units. Structures outside that scope are usually classified as commercial construction projects by states.


A Breakdown of Commercial Construction Costs

There are numerous things to consider when it comes to commercial project prices. The project’s various components contribute and cost differently. The National Association of Home Builders provided us with data on the breakdown of a commercial building by components.


·         Foundation

According to the National Association of Home Builders, the cost of establishing the foundation accounts for 11.3 per cent of total construction expenditures. Excavation, concrete fills, backfills, and retaining walls, if needed, are all included in this price.


·         Labor

In a commercial building project, labour costs range from 20% to 40% of construction costs. Employee pay is included indirect costs, making them straightforward to calculate.

Employee perks, taxes, training, and employee development are indirect costs. Labour costs are also likely to fluctuate depending on the labour burden.


·         Materials

The design team’s material costs significantly impact the construction costs. Steel buildings, for example, are more expensive than concrete structures because they require a lot of manufacturers. This cost varies between 17.3 per cent and 25%.


·         Region

Anecdotal evidence suggests that the zoning in which a project is located influences building costs. However, cost increases due to zoning are unpredictable, and it’s difficult to predict how they will alter over time and place.

Access to resources is considerably more challenging in densely populated cities than in suburban settings. As a result, a project in New York City can cost nearly twice as much as one in the Midwest.


·         Fixture and Finishes

Finishes significantly increase the cost of a project. The cost of high-grade finishes is significantly higher than that of lower or mid-grade finishes. The exterior finishes cost accounts for approximately 15% of the total building cost. Walls, roofing, and windows are examples of these. These are some of the most expensive project costs, accounting for 29.1% of the total. The price varies depending on the type of finish.


Costs of Commercial Construction by Region

The structure’s location has a significant impact on the overall construction cost. To compute the average cost per square foot, we evaluated prices from multiple major cities to find the average cost for the five most frequent commercial building types in each U.S. region.


1.      Western United States

Cities like San Francisco, San Diego, Las Vegas, Seattle, Portland, Sacramento, and Honolulu have greater commercial construction prices than the rest of the country. The western United States is noted for its coastal cities and environmentally friendly architecture, resulting in average building costs of $539 per square foot.

Medical centres are the most expensive buildings to construct in the Western United States, costing $742 per square foot, community buildings at $657, office buildings at $511, retail spaces at $407, and schools at $379.


2.      Eastern United States

The eastern United States has slightly lower commercial building costs, but they are still higher than the national average at $523 per square foot. Washington, D.C., Philadelphia, New York, Boston, and Raleigh-Durham are part of this region, containing five typically expensive metro centres.

Medical facilities cost roughly $720 per square foot in the Eastern United States, while community buildings cost $648, office building $518, retail spaces $424, and schools $349.


3.      Midwest

In Chicago, Denver, and Nashville, commercial building projects cost roughly $459 per square foot. Because of the region’s considerable temperature changes, the real cost for various regions in the Midwest can vary, but the averages from its largest cities provide a decent starting point.

Schools are the most cost-effective commercial structures to construct in the Midwest, costing $266 per square foot. Retail spaces come next at $388, followed by office buildings at $465, medical centres at $581, and community buildings at $593.

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