RSMeans’ dollar-per-square-foot construction costs for four industrial-type buildings

10/19/2012 by Alex Carrick

Accompanying this report are tables and graphs based on RSMeans’ measures of dollar-per-square-foot construction costs.

This month’s results focus on four industrial types of structure – a typical 3-story factory, an auto sales garage, a warehouse and an aircraft hangar.

Ranking by expense

Most expensive to build – on a dollar-per-square-footage basis – is a 3-story factory.

Next in line is an aircraft hangar, followed by an auto sales garage, then a warehouse.

It’s a drop of approximately one-quarter in price between the most expensive type-of-structure, a 3-story factory, and the least, a warehouse.

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.

Auto sales garages and aircraft hangars also belong in this low-expense grouping.

Add in convenience stores as well.  

Department stores and movie theatres are a little pricier. 

In the mid-range for construction costs are nursing homes, office buildings, hotels and high-rise apartment buildings.

For office buildings and apartment buildings, heights above ten stories tend to lower the dollar-per-square-footage cost.

Also in the mid-range for construction costs are elementary and secondary schools, along with institutions of higher learning (i.e., college buildings).

By far the most expensive types of structure to build are hospitals, jails/prisons, courthouses and police stations.

Some of the foregoing institutional building categories exceed $350 per square foot in the largest urban centers.

In New York, for example, the cost of a low-rise hospital exceeds $400 per square foot.

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 centers.

Relatively low-cost cities are mainly in the southeast and south-central. Included are Miami, Atlanta, Phoenix, New Orleans, Houston, Dallas and Winston-Salem.

Kansas City, Detroit, San Diego, St.  Louis, Pittsburgh, Portland and Cleveland are situated in the middle among the 25 cities set out in the tables.

Washington, Denver and Baltimore are in the low mid-range.

Minneapolis is the nation’s sixth most expensive construction-cost city. Los Angeles and Seattle on the West-Coast are 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 17% 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 costs 32% more to build in Chicago than in Atlanta. The inverse of the equation is that it costs 24% less to build in Atlanta than in Chicago.

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 nearly three-quarters (+74%).

In a couple of final comparisons, Atlanta and Miami construction costs relative to New York are about one-third cheaper. Houston and Dallas are even more of a bargain.

Year over year construction costs

For the latest period (September 2012), the 25-city average year-over-year cost increase was greatest for a warehouse (+3.8%), followed by a 3-story factory (+3.6%), an aircraft hangar (+3.1%) and an auto sales garage (+2.8%).

From highest to lowest, New Orleans, San Francisco, Pittsburgh, Phoenix and New York City ranked numbers one through five with respect to year-over-year cost increases among the 25 cities in the latest month.

Detroit, Denver, Washington, Atlanta and Kansas City formed the next rung on the ranking ladder.

Cities with the lowest rates of construction cost increases were Philadelphia (at the bottom of the listing), Portland, Minneapolis, Baltimore and Houston.

Sixth, seventh and eighth places at the modest end of the scale were occupied by Winston-Salem, Seattle and Dallas respectively.

The outlook for construction costs

The U.S. economy is starting to crank out numbers that are surprisingly good.

Auto sales have perked up nicely. Consumers have straightened out their balance sheets. Retail spending has returned above +5.0% year over year.

There is an energy sector boom underway based on extracting oil and natural gas from shale rock. And in construction, the housing sector has returned from the dead.

U.S. home starts in September were 872,000 units, seasonally adjusted and annualized. That was an increase of 15% versus the previous month and a gain of 35% compared with September of last year.

Residential building permits in the latest month were close to 900,000 units, guaranteeing there will be ongoing momentum in the marketplace.

The improved housing sector is ushering in one commodity price advance that will have an impact on construction material costs. Lumber prices are already on the move. They’re back to levels not seen since 2006.

There are also some supply constraints that will provide more lift. In the worst of the recession, many sawmills were shuttered. It will take a while for the lost capacity to be restored.

Also, the mountain-pine beetle has exacted a great deal of damage on some forestry stocks, most notably in British Columbia.

China is a huge factor in most commodity markets, accounting for something approaching 40% of world demand. In lumber, however, that nation’s share is a relatively modest 10%.

Copper demand worldwide this year and next is expected to exceed supplies, providing an upward push in another commodity area.

The year-over-year change in the Consumer Price Index (CPI) in September was +2.0%.

A bellwether indicator is gasoline prices. They were +6.8% year over year after being flat for most of the previous 12 months.  

The unemployment rate in construction in the latest month dropped to 11.9% from 13.3% a year ago. That’s consistent with the improving housing sector.

Reed Construction Data’s calculation of non-residential building starts in September showed a 3.3% month-over-month gain. The year-to-date advance was been +9.3%.

There’s good to modest improvement on many fronts. Construction costs are keeping step with the general forward movement in the overall U.S. economy.

It will be wise to keep an eye on some sub-component materials pricing for abrupt breakouts in the months ahead.

U.S. dollars per square foot construction costs –
By type of structure – September 2012
    MAJOR CITIES
(alphabetically)
FACTORY (3 STORIES) AUTO SALES GARAGE
2012 2011   % Change 2012 2011   % Change
1   ATLANTA $117.26 $113.06   3.7% $104.34 $101.40   2.9%
2   BALTIMORE 123.62 119.79   3.2% 110.00 107.44   2.4%
3   BOSTON 155.69 150.20   3.7% 138.53 134.72   2.8%
4   CHICAGO 154.50 149.08   3.6% 137.47 133.71   2.8%
5   CLEVELAND 130.78 126.27   3.6% 116.37 113.25   2.7%
6   DALLAS 112.63 108.94   3.4% 100.22 97.71   2.6%
7   DENVER 124.82 120.29   3.8% 111.06 107.89   2.9%
8   DETROIT 136.48 131.51   3.8% 121.44 117.95   3.0%
9   HOUSTON 114.22 110.56   3.3% 101.63 99.17   2.5%
10   KANSAS CITY 137.27 132.38   3.7% 122.14 118.73   2.9%
11   LOS ANGELES 141.64 136.99   3.4% 126.04 122.87   2.6%
12   MIAMI 118.72 114.80   3.4% 105.64 102.97   2.6%
13   MINNEAPOLIS 147.47 142.97   3.1% 131.22 128.23   2.3%
14   NEW ORLEANS 117.00 111.81   4.6% 104.11 100.28   3.8%
15   NEW YORK CITY 175.17 168.40   4.0% 155.86 151.04   3.2%
16   PHILADELPHIA 150.52 146.21   2.9% 133.93 131.14   2.1%
17   PHOENIX 117.26 112.43   4.3% 104.34 100.84   3.5%
18   PITTSBURGH 134.49 128.89   4.3% 119.67 115.60   3.5%
19   PORTLAND 131.84 127.89   3.1% 117.31 114.71   2.3%
20   ST. LOUIS 135.81 131.26   3.5% 120.85 117.73   2.7%
21   SAN DIEGO 136.48 131.63   3.7% 121.44 118.06   2.9%
22   SAN FRANCISCO 163.51 156.56   4.4% 145.49 140.42   3.6%
23   SEATTLE 138.07 133.62   3.3% 122.85 119.85   2.5%
24   WASHINGTON, DC 130.12 125.40   3.8% 115.78 112.47   2.9%
25   WINSTON-SALEM 100.57 97.35   3.3% 89.49 87.32   2.5%
MAJOR CITIES
(alphabetically)
WAREHOUSE AIRCRAFT HANGAR
2012 2011 % Change 2012 2011 % Change
1   ATLANTA $85.05 $81.90   3.8% $105.58 $102.31   3.2%
2   BALTIMORE 89.66 86.78   3.3% 111.31 108.40   2.7%
3   BOSTON 112.92 108.81   3.8% 140.18 135.92   3.1%
4   CHICAGO 112.05 108.00   3.8% 139.10 134.91   3.1%
5   CLEVELAND 94.85 91.47   3.7% 117.75 114.27   3.0%
6   DALLAS 81.69 78.92   3.5% 101.41 98.59   2.9%
7   DENVER 90.53 87.14   3.9% 112.38 108.85   3.2%
8   DETROIT 98.98 95.27   3.9% 122.88 119.00   3.3%
9   HOUSTON 82.84 80.10   3.4% 102.84 100.05   2.8%
10   KANSAS CITY 99.56 95.90   3.8% 123.59 119.79   3.2%
11   LOS ANGELES 102.73 99.24   3.5% 127.53 123.97   2.9%
12   MIAMI 86.11 83.17   3.5% 106.89 103.89   2.9%
13   MINNEAPOLIS 106.96 103.57   3.3% 132.78 129.38   2.6%
14   NEW ORLEANS 84.86 81.00   4.8% 105.34 101.18   4.1%
15   NEW YORK CITY 127.04 122.00   4.1% 157.71 152.39   3.5%
16   PHILADELPHIA 109.17 105.92   3.1% 135.52 132.31   2.4%
17   PHOENIX 85.05 81.45   4.4% 105.58 101.75   3.8%
18   PITTSBURGH 97.54 93.37   4.5% 121.09 116.64   3.8%
19   PORTLAND 95.62 92.65   3.2% 118.70 115.73   2.6%
20   ST. LOUIS 98.50 95.09   3.6% 122.28 118.78   3.0%
21   SAN DIEGO 98.98 95.36   3.8% 122.88 119.12   3.2%
22   SAN FRANCISCO 118.59 113.42   4.6% 147.22 141.68   3.9%
23   SEATTLE 100.14 96.80   3.4% 124.31 120.92   2.8%
24   WASHINGTON, DC 94.37 90.84   3.9% 117.15 113.48   3.2%
25   WINSTON-SALEM 72.94 70.52   3.4% 90.55 88.10   2.8%
Data source: 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).
Charts: Reed Construction Data – RS Means and CanaData.

3-story factory construction cost:
September 2012 ranking of major U.S. cities
Elementary school construction cost: July 2012 ranking of major U.S. cities
Auto sales garage construction cost:
September 2012 ranking of major U.S. cities
Junior high school construction cost: July 2012 ranking of major U.S. cities
Warehouse construction cost:
September 2012 ranking of major U.S. cities
High school construction cost: July 2012 ranking of major U.S. cities
Aircraft hangar construction cost:
September 2012 ranking of major U.S. cities
Vocational school construction cost: July 2012 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 – RS Means (www.rsmeans.com).
Charts: Reed Construction Data – CanaData