Cost to build commercial property

Commercial construction projects come with a high price tag, and companies that take them on need to 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

• Factors That Affect Commercial Construction Cost
• Commercial Construction Cost by Building Type
  • Commercial Offices
  • Manufacturing Facilities
  • Schools and Universities
  • Hospitals and Healthcare Facilities
  • Public Spaces and Community Buildings
  • Shopping Centers and Parking Structures
• Commercial Construction Cost By Region
  • Western U.S.
  • Eastern U.S.
  • Midwest
  • Southern U.S.
• How To Estimate Project 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. In addition to region and building type, the following factors play a role in determining the total cost per square foot.

Building Permits

Permits typically account for less than 3 percent 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 well 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. They include employee wages, taxes, benefits and training and can 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 heating, cooling, 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 building made from prefabricated materials 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.

Commercial Construction Cost By Building Type

The following data comes from a Cummings construction market analysis on commercial construction costs across the U.S.

Building Type	Average Cost Per Square Foot in the U.S.
Single-Story Offices	$313
High-Rise Offices	$660
Schools	$327
Universities	$564
Manufacturing Facilities	$363
Healthcare Facilities	$668
Museums and Entertainment	$892
Shopping Centers	$394
Parking Structures	$107

The average construction cost per square foot for commercial buildings varies depending on the type and size of the structure. Some of the most common types of commercial buildings include:

Commercial Offices

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.

Manufacturing Facilities

The average cost for manufacturing facilities varies widely depending on their intended use. For example, regional distribution warehouses average at $209 per square foot while technology laboratories average at $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, so it’s important to fully understand the breakdown before getting started on a project.

• 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 at 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, respectively. 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 U.S. Region
	Western U.S.	Eastern U.S.	Midwest	Southern U.S.
Office Buildings	$511	$518	$465	$461
Schools	$379	$349	$266	$238
Community Buildings	$657	$648	$593	$513
Medical centers	$742	$720	$581	$521
Retail	$407	$424	$388	$336

Western U.S.

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 at $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.

Eastern U.S.

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.

Midwest

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 at $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.

Southern U.S.

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 US, schools cost around $238 per square foot, retail spaces cost $336, office buildings cost $461, community buildings cost $513 and medical centers cost $521.

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 and designer to determine the exact cost per square foot for your project. Professional estimators can also be a great resource for companies taking on large-scale projects.

If you need help determining your project’s budget, consider creating a construction estimate document and getting quotes from multiple contractors and suppliers. You will often find that things like renting equipment rather than buying and carefully planning out every step of the construction process can lower total project costs.Whether you are looking to renovate an existing commercial building or build one from the ground up, knowing the commercial construction cost per square foot ahead of time can save your project from unexpected expenses later on.