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The cost of commercial construction projects can range to a large degree, depending on variables of the project. Most notably, the quality and size of a commercial project play a significant role, but other factors such as the location and additional services also play a part.

Whether you’re a property developer drafting a budget or a pre-construction team crunching numbers, here are the most important factors to note regarding commercial construction costs.

The Average Cost of Commercial Construction

The cost of a commercial building is significantly higher than a residential building, regardless of size. Various factors that add to the increased expense include compliance standards and materials, as well as overhead costs, labor, and equipment.

A general commercial construction contractor will manage the entire project and all of the subcontractors involved. Due to the elevated cost, commercial projects are usually funded by government agencies, corporations with bank financing, wealthy owners, or developers. On the plus side, commercial construction projects are usually completed at a faster rate.

As a guideline, commercial buildings cost between $16 to $20 per square foot, but can rise as high as $40 per square foot in the instance of additional finishings. So, what contributes to these cost estimates?

Factors Impacting Commercial Building Construction Costs

The square foot cost of a commercial building will vary depending on the following factors.

Building Quality

The building’s infrastructure impacts the overall quality, further impacting the cost of the project. Depending on the infrastructure, the building will fit into one of the following classes:

  • Class A – highest quality with top tier features, aesthetically pleasing finishes, and built-in costly locations
  • Class B – average quality with decent features, usually less than four stories tall
  • Class C – located in inexpensive areas and built using lower-quality materials in comparison to the above

Design and Architecture

The overall design of the building impacts the construction cost, with a simpler design being more cost-effective. For example, a high-rise building includes architectural design features that adds to the construction cost when compared to a single-story building.


Depending on the building’s location, the cost of manual labor can vary. For example, labor costs are less outside of metropolitan areas.

Another factor that impacts labor costs is the environment. Building projects done in unfavorable weather conditions could demand more skilled builders which increases building costs as well.

Construction Materials

Construction materials are an obvious expense that need to be included in construction cost estimates. The larger the building, the more materials needed to construct, and the more expensive the project.

Depending on the nature of the building, these costs can differ further. For example, some project managers spend more on steel materials to add an aesthetic finish, while others save by using less expensive materials. Ultimately, the purpose of the building will determine the materials needed.

Compliance and Permits

Compliance is a fundamental consideration for every construction project. Without the correct permits, the project owner may find themselves having to pay costly fines. All commercial construction estimates should include permit fees which depend on the location of the project and the type of work that will happen on the site.

Internal Systems

Mechanical and electrical systems should also be included in the project’s cost calculation. The installation cost of mechanical systems such as HVAC, plumbing and energy elevator fixtures will vary depending on the size of the building. The same applies to electrical systems which need to meet the National Electrical Code.

Delivery and Equipment

A large portion of the project’s budget needs to be allocated to delivery of construction materials and equipment needed to erect the building in a safe manner. In some instances, expert workmen are needed to operate machinery, adding to the overall cost of construction.

The Best Way to Save Construction Costs

There are many different parts that contribute to the overall cost of a commercial construction project. It’s important to follow the correct procedures and use quality materials in order to save money in the long run.

Hiring expert commercial construction services is an effective way to cut down on costs, ensuring that building construction goes off without a hitch, and according to a predetermined timeline. At Konrad Construction, we offer quality building construction services that prioritize integrity, excellence, and honesty.

Contact us today to find out more about our expert services, and how we can help you save costs on your commercial construction project.