The cost to construct a building can vary depending on the materials used, the size and complexity of the structure, and geographic location. The average cost to construct a building has risen in recent years and is dictated by many factors. The most significant variables that affect the cost of construction are labor costs and the price of materials.
1. Cost per Square Foot of a New Single-Family Home
While the average cost of constructing a building can vary, some general principles apply to most buildings. The cost per square foot of a new single-family home depends on the location of the home and the size of the lot. A new one-story, single-family home will cost $69 per square foot on average. The size of the lot, as well as its location, can affect that cost dramatically. For example, a 1,920 square foot new single-family home in Essex County, NJ, costs almost $139 per sq ft. In contrast, an identical house built in St. Paul, MN, costs about $87 per sq ft.
2. Structural Design
The structural design will also affect the average cost of constructing a building and the labor needed to mix concrete, pour beams and foundations, and erect the walls. The construction cost with a structural design is roughly $17 per square foot. Some advanced structural designs can cut this cost to approximately $5 per square foot – however, these specialized designs are uncommon in today’s construction industry.
3. Materials Selection
The materials used in construction also impact the average cost to construct a building. Building materials such as concrete, glass, and high-performance insulation can triple the cost of a building. Steel buildings generally cost more to build than wood frame construction, and materials like granite, ceramic tile, and stainless steel countertops can increase the cost of a building by $30 per square foot or more.
4. Project Duration
The average cost to construct a building also depends on the project’s duration. Building codes require that all work must be done in stages and that workers be paid overtime premiums when they work more than 40 hours per week on a construction site. As a result, homebuilders often complete the framing and exterior before interior work begins. This allows builders to start the interior construction phase immediately after the previous team is offsite.
In addition to construction costs, labor is a significant factor in the actual cost to construct a building. Labor represents 35-65% of total construction costs. The average hourly rate paid to construction workers varies by type of industry and geographic location. In 2009, the average hourly rate for residential carpenters was $26.11, while controls engineers and drafters earned an average of $77.26 per hour.
6. Land Purchasing
The cost to construct a building also depends on the amount of land used for the project. According to the Brick Industry Association, it costs roughly $1.33 per square foot for land in Newark, NJ. Similarly, Brooklyn Heights, New York, is a low-cost area for land purchase at $1.05 per sq ft, while Silicon Valley is an expensive area with lots that range from $3.32-$12.50 per sq ft. Land cost is commonly one of the largest single concerns when building a house.
7. Equity Capital
The total amount of money to construct a building can vary depending on the use the building will have and the amount needed to finance it. Depending on the project, a developer may require up to $20 million in equity. This includes money used to finance land purchases and provide start-up capital for the project.
8. Site Preparation
It is also important to consider site preparation costs. This includes grading, relocating utilities, and demolition charges that vary widely depending on various factors. For example, site preparation averages $8 per sq ft, while preparing a site in Chicago can cost $80 per sq ft. Landowners will incur additional costs to prepare the site for a building, including landscaping and hardscaping and removing any existing structures.
In conclusion, it is important to note that while the average cost to construct a building varies, the actual cost will vary depending on many factors. As a result, it is always best to work with an experienced real estate professional who can develop an estimate based on your particular project.