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 types of structure. Means has updated specifications with regard to its building cost models for hospitals and an apartment building. For this reason, it is not valid to compare this year’s figures with last year’s in those categories. That is why the percentage change column reads “not applicable.” Specifications for the one other category, a nursing home, are comparable and year-over-year percentage changes are shown. 

Ranking by expense: Some major differences among the four structure types

Among the four categories set out in the table and graphs, it is most expensive to build a two- to three-storey hospital. A little less expensive on a dollar-per-square-foot basis is a four- to eight-storey hospital. Stepping down by about one-quarter in cost versus the most expensive hospital type is an eight- to 24-storey apartment building. Cheapest to construct, at just about half the expense of a low-rise hospital, is a nursing home.

New York is the most expensive; cities in the South are least expensive

New York City has the highest dollar-per-square-foot construction costs in the country. San Francisco, Boston, Philadelphia and Chicago round out the top five among major U.S. urban areas. Relatively low-cost cities are mainly in the southeast and southwest, including Miami, Atlanta, Phoenix, Houston and Dallas. New Orleans is also low cost despite the push that has been underway to rebuild since Hurricane Katrina.

The nation’s capital, Washington, D.C., 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 15% lower than in San Francisco.

Some city comparisons

It is interesting to make some regional comparisons. It now costs about 27% more to build in Chicago than in Atlanta. The relationship is 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 slightly more than two-thirds or 68%.

Percentage changes restrained by recession

The year-over-year percentage change calculation is valid in the one category for which specifications have been kept the same. The 25-city average is +0.1% for a nursing home. Pittsburgh (+2.1%) 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 the first half of next year.