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

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

This month’s results are for four types of educational buildings below the level of colleges and universities – an elementary school, junior high school, high school and vocational school.

In other words, these are the buildings housing kindergarten through grade 12.

Ranking by expense

Most expensive to build – on a dollar-per-square-footage basis – is a junior high school.

Next in line for cost are an elementary school, a vocational school and a high school.

In truth, however, there is minimal difference between the four types of structure. The dollar-per-square-footage costs are virtually the same, varying mostly according to location.

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 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, Phoenix, New Orleans, Atlanta, 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 28% 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 (+73%).

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 (July 2012), the 25-city average year-over-year cost increase was greatest for a vocational school (+6.4%), followed by a high school (+4.5%), a junior high school (+3.5%) and an elementary school (+2.8%).

The relatively large percentage change for a vocational school was primarily due to a run-up in costs for heating, ventilating and air conditioning equipment. HVAC systems are a larger share of the whole in vocational schools (20%) than in the other categories.

Thanks in part to export orders from emerging nations, machinery and equipment producers have been achieving considerable sales success in the recovery so far.

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

New York, Winston-Salem, Houston, Chicago and Philadelphia formed the next rung on the ranking ladder.

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

Sixth, seventh and eighth places at the modest end of the scale were occupied by San Diego, Seattle and Washington respectively.

The outlook for construction costs

The year-over-year change in the Consumer Price Index (CPI) in June was only 1.7%.

The energy sub-component index of the CPI actually declined -3.9% in the latest month compared with the same month of last year. That was partly because the world price of oil has stayed in a mid-range. It currently sits at just under $90 U.S. per barrel.

Other commodity prices – and commodities are the basic building blocks for all materials going into construction – have also exhibited weakness relative to their most recent peaks.

The unemployment rate in construction in the latest month dropped to 12.8% from 15.6% a year ago. But that doesn’t mean labor costs are about to take off any time soon.

Average hourly earnings in construction in June were +1.5% and average weekly earnings were +1.8%.

The national unemployment rate at 8.2% is too high for labor to start making inordinate demands.

Total non-residential construction starts in the first half of the year, according to Reed Construction Data, were ahead 13.9% versus the same January to June period in 2011.

But starts in the individual month of June were -2.9% relative to June last year, reflecting the overall hesitancy that has crept into notions of what the immediate future holds for the world economy. 

Housing starts appear to have hit bottom. Their upward recovery path, however, is likely to be quite gentle at first.

In summary, the factors that would suggest a surge in construction costs don’t appear to be in place at the moment.

There should be an elongation of the period during which investment plans can be undertaken with a modest bargain in mind.