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 hotel, motel and residential type-of-structure categories, delineated by story height.

Means has recently altered specifications with regard to its costing models. Therefore, in many cases, it is not valid to compare this year’s figures with last year’s to determine percentage changes.

Ranking by expense

Among the four types of structure set out in the table and graphs, it is most expensive to build an eight- to 24-story hotel. Next most expensive on a dollars-per-square-foot basis is a four- to seven-story hotel. In third and fourth positions with only a minor variance are a four-to seven-story apartment building and a two- to three-story motel respectively.

The drop in cost from most expensive to least is less than 10%.  

Comparisons with other types of structure

According to RSMeans, the cheapest types of structure to build are factories, warehouses and parking garages.

The accommodation buildings considered in this report are in the mid-range among all types of structure for their square-foot costs of construction.

They are comparable to most office buildings and to facilities at the level of higher education (i.e. colleges). However, they are slightly more expensive to build on a square-footage basis than elementary and secondary schools.

They are also a little more expensive to build than most recreational buildings (e.g., gymnasiums).

But they are not nearly as pricey as some categories of buildings, mainly in the public sector realm.

By far the most expensive types of structure to build are hospitals, jails/prisons, courthouses and police stations. Some of these are upwards of $400 per square foot in the largest urban centers.

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 when it comes to major U.S. urban areas.

Relatively low-cost cities are mainly in the southeast and southwest. Included in this list are Miami, Atlanta, Phoenix, Houston and Dallas.

New Orleans is also low cost. All of the restoration work in that city since Hurricane Katrina has apparently been achieved without a big ratcheting up in costs.

Kansas City, Detroit, St.  Louis, Pittsburgh, Portland and Cleveland are situated in the middle among the 25 cities considered in the table and graphs. Washington, Denver and Baltimore are in the low mid-range.

Minneapolis is the nation’s sixth most expensive construction-cost city. Los Angeles, Seattle and San Diego are a West-Coast tier that is 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 16% lower than in high-cost San Francisco.

Portland is nearly one-fifth (-18%) less expensive than the City by the Bay for building projects.

Some other city comparisons

In some other city comparisons, it now costs about 32% more to build in Chicago than in Atlanta. The relationship is almost the same (+28%) 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 almost three-quarters (+74%).

The outlook for construction costs

Commodity prices were advancing strongly earlier this year, but they have paused in their march upward of late. Several factors are at play, mainly on the international stage.

Austerity measures in Europe to deal with sovereign deficit and debt problems have lowered expectations for growth in the region. And efforts to cool China’s superheated economy appear to be finally kicking in. Government authorities in Beijing are looking to take preventative action to forestall a messy bursting of residential property-value bubbles.

The moderation in commodity prices extends somewhat the period of reasonable building costs, since commodities are the building blocks of almost all construction materials.

There is also the matter of the stage of the cycle for major sub-categories. New home construction is expected to pick up later this year, but its depressed state has dragged on longer than even most pessimists would have ever believed possible.

In non-residential work, private sector financing remains slow to materialize and public sector stimulus money is winding down. Furthermore, governments are strapped for funds for even normal capital expenditures due to only slowly recovering tax revenue.