Commercial Construction Costs Overview

5 Factors that Drive Commercial Construction Costs

When planning a new construction project, the biggest question most project owners want answers to involves how much to budget for commercial construction costs.

Like most things in life, the answer depends on many factors, not the least of which is the square footage of the structure. Location may play a role as well, with highly populated areas carrying a higher price tag.

While the cost to construct commercial buildings can vary greatly, the following five factors will help you understand where your dollars go when planning a project.

1. Construction Design, Materials, and Finishes

Many of the factors that contribute to commercial building costs are determined on the front end when architectural designs and specs are drawn up. Involving an experienced construction manager as part of the pre-planning process can help determine an average cost per square foot for your commercial property, and identify budget busters before a project goes out to bid

For example, you may like the aesthetics of a multistory design, but it may require unique fabrication requirements, cranes to lift building materials, and added safety protocols for workers that will drive costs up. On the other hand, a comparable single story building with the same square footage will typically cost less.

The price of building materials, such as lumber and steel, can fluctuate with markets and impact construction costs, and the types of doors, windows, fixtures, and finishes will also have a major impact. A door system for a high-security jail or restricted access maternity ward at a hospital, for example, will cost thousands, whereas a simple office door may only cost a few hundred dollars.

The finishing touches have a way of adding up, too. Selecting affordable floor and window coverings, fixtures, cabinetry, and the like can help keep commercial project budgets in check. Also consider soft costs such as building permits, inspections, architectural plans, and legal fees.

2. Labor

The region where a building is being constructed will play a role in associated labor costs. Unlike many metropolitan areas in the United States, the Upper Midwest generally has a reasonable cost of living and thus equitable labor costs.

What can drive up labor costs, however, are construction accidents that lead to costly delays. That’s why it’s critical to confirm your general contractor’s safety record and ensure they have a strong safety program.  

3. Customizations and Industry Requirements

Custom work comes at a premium, whether it’s cabinetry and tilework or archways, floor details, or exposed beams. Architectural features such as cantilevered roofs, an expansive wall of windows, or stone exteriors will make a statement but come at a cost. Depending on the type of building and its use, some of these features may be appropriate, such as a performing arts center, museum, or upscale hotel.

The type of commercial construction you need will also play a role in determining building costs. If your industry and building use calls for Type I construction versus Type IV (according to the International Building Code), you’ll need to budget more for the types of construction materials required for each. A typical office building will be more cost effective to build and won’t require the same stringent requirements as a hospital, for example.

The healthcare industry also requires construction crews to implement proper infection control protocols when adding on to a facility. Dust suppression, negative pressure rooms, frequent cleaning, and debris removal are among the often overlooked hospital renovation costs. Other industries, such as law enforcement require specialty materials and finishes in addition to robust technology and security integrations. Ensure you work with a construction manager who specializes in your industry and is familiar with how to comply with these types of requirements.

4. The Unexpected 

The environment has a way of interfering with the best laid plans, and severe weather conditions could threaten a structure or delay work considerably. Be sure to talk with your construction team about how they’ve dealt with nature and how they mitigate potential risks.

Another aspect of Mother Nature is soil conditions. A site assessment and soil analysis could reveal unsuitable soils that require remediation. Removal of contaminated soil may be required, or pile foundations or piers may need to be installed to ensure a solid foundation. Such measures require specialized heavy equipment and are costly.

5. Operations

Often disregarded are the costs of lost productivity during a renovation project. Some areas of a facility may need to be shut down to tie in plumbing or electrical, or switch to new technologies. In the case of new construction, the costs and disruption to transition from an old facility also needs to be considered, including staff tours, training time for security systems, or other protocols.  

Are you moving existing systems to a new location or facility? Those operational costs need to be considered, too, and remember that some systems require an authorized vendor to move them in order to maintain warranties.

Every project owner dreads scope creep, the seemingly little things that keep adding up. Anticipating as many of these ancillary activities as possible up front will help avoid costly surprises. One of the best ways to develop a realistic budget for your construction project is to work with a construction management team that has experience in your industry and a proven record of satisfied clients.

Talk with the commercial construction experts at The Samuels Group today to request a complimentary consultation and cost estimates for your building project. Bring your questions and let’s explore the possibilities together. 

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