Accompanying this report are tables and charts based on RSMeans’ measures of dollar-per-square-foot construction costs. The results for 25 major cities are shown for four “industrial shell” types of structure. Means has updated specifications with regard to its building cost models for an auto sales garage and a warehouse. For this reason, it is not valid to directly compare this year’s figures with last year’s in those two categories. That is why the percentage change column reads “not applicable.” Specifications for the other two categories are comparable and percentage changes, year over year, are shown. 

Ranking by expense

Among the four categories set out in the table and graphs, it is most expensive to build a factory. The second-most expensive is an auto sales garage. Third spot belongs to an aircraft hangar. In last position, and a considerable step down from the other three, is a warehouse. It is almost one-quarter, or 25%, cheaper to build a warehouse than a three-story factory, on a square footage basis.

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 round out the top five. Relatively low-cost cities are mainly in the southeast and southwest, including Miami, Atlanta, Phoenix, Houston and Dallas.

The nation’s capital, Washington, is in the low mid-range for construction costs among the 25 cities considered in the table and graphs. The same holds true for Pittsburgh and Denver. Seattle, Detroit and St. Louis are in the upper mid-range. In California, dollar-per-square foot construction costs in Los Angeles and San Diego are between 13% and 16% lower than in San Francisco.

Some city comparisons

It is interesting to make some regional comparisons. It now costs about 31% more to build in Chicago than in Atlanta. The relationship is about the same (27%) 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 or 74%.

Percentage changes restrained by recession

The year-over-year percentage change calculation is valid in the two categories for which specifications have been kept the same. The 25-city average is +4.2% for a three-story factory and +3.8% for an aircraft hangar. Chicago has recorded the largest year-over-year gain in construction costs. With the economy struggling, construction costs are being restrained as well. However, some movement in underlying commodity prices is already underway and the hiatus for construction costs may not last much beyond early next year.