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RSMeans’ dollars-per-square-foot construction costs: four types of office buildings

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Accompanying this report is a table based on RSMeans’ measures of dollar-per-square-foot construction costs. The results for 25 major cities are shown for four office building categories based on height. Among the four designations, it is most expensive to build a medical office building. Least expensive is an eleven-to-twenty story office tower. This report also presents a number of key city and other type-of-structure cost comparisons. Additionally, there is commentary on the outlook for const

Accompanying this report is a table based on RSMeans’ measures of dollar-per-square-foot construction costs. The results for 25 major cities are shown for four office building categories, distinguished mainly by story height.

Ranking by expense

Among the four property categories set out in the table, it is most expensive to build a medical office building. The dollar-per-square-foot cost drops 20% for the next most expensive type of structure, a two-to-four story office building.

A further slight step down in cost, on a dollars-per-square-foot basis, is a five-to-ten story office building.

An eleven-to-twenty story office building is least expensive to build among the four categories considered. Stated simply, the average cost per square foot generally drops with the addition of more stories.

In fact, to build an eleven-to-twenty story office tower requires only about two-thirds the expenditure on a square footage basis compared with a low-rise medical office building.

Comparisons with other types of structure

According to RSMeans, the cheapest types of structure to build, after extremely low-cost parking garages, are factories and warehouses.

A convenience store also belongs in this low-expense grouping. Department stores and movie theatres are a little pricier. 

In the mid-range for construction costs are office buildings, hotels and high-rise apartment buildings. Heights above ten stories tend to lower the dollar-per-square-footage cost.

Also in the mid-range for construction costs are institutions of higher learning, along with schools at the elementary and secondary levels.

By far the most expensive types of structure to build are hospitals, jails/prisons, courthouses and police stations. Some of these exceed $350 per square foot in the largest urban centers.

New York is the most expensive; cities in the South are least expensive

New York has the highest dollar-per-square-foot construction costs in the country. San Francisco, Boston, Chicago and Philadelphia hold the other four positions in the Top Five among major U.S. urban areas.

Relatively low-cost cities are mainly in the southeast and southwest. This includes Miami, Phoenix, Atlanta, Houston and Dallas.

New Orleans is also low cost. All of the restoration work in that city since Hurricane Katrina has apparently been achieved without a big run-up in costs.

Detroit, Kansas City, St. Louis, Pittsburgh, Portland and Cleveland are situated in the middle among the 25 cities set out in the table. Washington, Denver and Baltimore are in the low mid-range.

Minneapolis is the nation’s sixth most expensive construction-cost city. Los Angeles, Seattle and San Diego are a West-Coast tier that is in the upper mid-range.

Along the Pacific shoreline, dollar-per-square foot construction costs in Los Angeles, Seattle and San Diego are between 13% and 16% lower than in high-cost San Francisco.

Portland is nearly one-fifth (-19%) less expensive than the City by the Bay for building projects.

Some other city comparisons

In some other city comparisons, it now costs 33% more to build in Chicago than in Atlanta. There is a 27% differential between higher-cost Philadelphia and lower-cost Miami.

The mark-up in New York, the most expensive city among the 25 shown, and Winston-Salem N.C., the least expensive, is more than three-quarters (+76%).

Year over year construction costs

Chicago has experienced the greatest year-over-year gains in construction costs, ranging from +0.9% for an eleven-to-twenty story office tower to +2.5% for a medical office building. San Francisco is in second position among the 25 cities for fastest year-over-year percentage gains.

New York, where the actual dollar-per-square-foot cost is the highest, currently stands in the middle of the pack for year-over-year change in cost. Most of the 25 cities showed little upward movement in cost in January of this year versus the same month in 2010.

The outlook for construction costs

Commodity prices have been on the move upward. Copper has reached a new record high. Nickel and aluminum prices have moved back up to where they were two years ago. The global price of oil has made back half of its peak-to-trough decline.

Lumber prices still remain largely moribund, since housing starts remain stuck in the basement. January 2011’s starts level (+14.6% month to month) did show marked improvement but permits (-10.4%) in the same month pulled back. Permits are an advance indicator for starts.

RSMeans’ latest construction cost index nation-wide recorded a 2.3% gain overall in January 2011 versus January 2010, made up of materials at +1.8% and labor at +2.9%.

However, those numbers mask more dramatic recent price changes. The latest quarter-to- quarter annualized change for the overall index was +3.7%. While the labor sub-index rose a modest 1.9% quarter to quarter annualized, material costs accelerated to +5.6% annualized between October 2010 and January 2011.

It would seem the period of bargain-basement construction costs is approaching an end.

U.S. dollars per square foot construction costs –
By type of structure – February 2011
    MAJOR CITIES
(alphabetically)
office building (2 to 4 storIES)
office building (5 to 10 storIES)
Office building (5 to 10 stories) construction cost:
February 2011 ranking of major U.S. cities
Office building (5 to 10 stories) construction cost: February 2011 ranking of major U.S. cities
Office building (11 to 20 stories) construction cost:
February 2011 ranking of major U.S. cities
Office building (11 to 20 stories) construction cost: February 2011 ranking of major U.S. cities
Medical office building construction cost:
February 2011 ranking of major U.S. cities
Medical office building construction cost: February 2011 ranking of major U.S. cities
These charts and tables were abstracted from RSMeans cost data publications for the A/E/C industry. For more information about RSMeans Square Foot Cost Guide and RSMeans CCI (Construction Cost Index), which indexes square foot costs for cities in the U.S. and Canada, visit the online bookstore at www.rsmeans.com and click on cost data publications (or call 1-800-448-8182).
Data source: Reed Construction Data – RSMeans (www.rsmeans.com).
Charts: Reed Construction Data – CanaData

by Alex Carrick

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