Commercial construction costs vary greatly and typically fall within the range of $30 to $100 per square foot. With so many variables at play, it’s impossible to give an exact figure without first assessing all relevant factors. This article at Royal Estimation will provide an overview of what to expect when constructing a commercial building and how much it can cost in terms of labor, materials, and other expenses.

We’ll look at factors that affect pricing and offer advice on ways to save money during the construction process. With this knowledge, you’ll be able to plan and budget effectively for your commercial building project.

Learn more about how much it costs to build a commercial building and the factors that affect pricing below.

What Are the Factors that Determine the Cost of Constructing a Commercial Building?

The total cost of constructing a commercial building will vary significantly depending on the scope of the project and the complexity of the design. Some key factors that affect the overall cost include:


The cost of constructing a building is greatly influenced by its location. Factors such as the availability of land, accessibility, local labor rates, and distance to suppliers and utilities can cause the expenses to fluctuate. Generally, urban areas have higher land and labor costs than less developed and rural regions.

Size and Complexity:

The cost of construction for commercial buildings is influenced by their size and complexity. Bigger buildings require more materials, labor, and time. Additionally, unique architectural features like intricate interiors, specialized building systems, or unique facades can increase the overall cost.

Design and Architecture:

The cost of construction can be affected by the architectural design and aesthetic choices made. Designs that are unique or complex may require specialized expertise in engineering and architecture, which can drive up costs. Moreover, the cost of construction can be influenced by decisions surrounding building materials and sustainability features.

Building Type:

The cost of constructing a commercial building can vary depending on the type of structure. Different types of buildings will require different levels of complexity and materials to construct, which in turn affects the total cost.

Materials and Equipment:

The choice of building materials and equipment can greatly affect the overall cost. Prices for materials such as concrete, steel, glass, and finishes may vary in quality, availability, and the market. Using specialized or high-grade materials can result in higher costs, whereas selecting more affordable alternatives might help cut down expenses.

Labor Costs:

Construction expenses are significantly impacted by labor costs. The cost of labor can be influenced by several factors such as the prevailing wages in the area, labor market conditions, and the availability of skilled workers. The need for specialized trades, subcontractor fees, and labor-intensive building methods can also add to the overall cost.


The finishing touches of a commercial building can add significant costs. Commonly, these include window treatments, flooring, wall coverings, paint, and other decorative elements that give the building its finished look.

Permits and Regulations:

It is important to comply with building permits, codes, and regulations as it can affect the overall project costs. The procedures involved in obtaining permits, inspections, and fulfilling requirements may incur fees, administrative costs, and possible project delays if not adequately planned in the budget.

Site Conditions:

Costs are influenced by the condition and characteristics of the construction site. Complicated terrain, soil conditions, or environmental factors may necessitate extra groundwork, excavation, or mitigation efforts. Additionally, unexpected issues like hazardous materials or archaeological discoveries can result in higher costs.

Utilities and Infrastructure:

The availability and accessibility of utilities, such as water, electricity, gas, and sewage systems can impact construction costs. Constructing in developed areas with existing infrastructure may be less expensive than building in undeveloped locations that require extensive utility connections or upgrades.

Inflation and Economic Factors:

Inflation and economic factors can affect the overall cost of construction. This includes changes in material costs, labor rates, and fuel prices, which can have a greater impact on long-term projects. Economic conditions, currency fluctuations, and construction service demands may also contribute to cost fluctuations.

Contractor and Subcontractor Selection:

Choosing contractors and subcontractors is important as it can impact project costs and outcomes. Established and experienced firms might have higher fees, but they could offer better quality, efficiency, and project management. On the other hand, going for less-established or low-cost contractors might come with risks and possible quality issues.

Project Timeline:

The length of the construction project can impact costs in several ways. If the project takes longer, there may be a rise in expenses due to inflation, prolonged usage of equipment and temporary facilities, increased labor costs over time, as well as potential disruptions or changes in market conditions. On the other hand, faster schedules or expedited construction methods may also incur additional expenses.

Sustainable Features:

Incorporating sustainable and environmentally friendly features in construction, such as energy-efficient systems, green roofs, or renewable energy technologies, may seem expensive at first. However, in the long run, they can save costs by consuming less energy, reducing operational expenses, and earning potential incentives or certifications.

By taking into account all these important factors during the initial planning phase, it is possible to get a better understanding of the project’s financial needs and guarantee that the construction of the commercial building stays within the budget.

Cost Per Square Foot of Different Methods For Constructing Commercial Building:

MethodMaterial CostBuild CostFinishing CostTotal
Metal Stud Frame$25 – $35$8 – $16$50 – $250$80 – $300
PEMB$20 – $35$5 – $10$50 – $250$75 – $295
Structural Steel$45 – $60$10 – $20$50 – $250$105 – $330
Tilt-Up$40 – 55$50 – $70$50 – $250  $140 – $375

How Can You Save Money When Constructing a Commercial Building?

There are several ways to save money when constructing a commercial building. These include:

Accurate Estimates:

Obtaining accurate estimates is essential for staying within a budget. It’s important to research building materials, labor costs, and other associated expenses to ensure that the project stays on track.

Optimizing Design:

Carefully evaluating design choices can help reduce costs. Consider selecting cost-effective options such as standard designs of modular construction methods for simpler projects.

Selecting the Right Materials:

Using high-quality, durable materials can help to reduce operational and maintenance costs in the long run. Careful selection of construction materials that are appropriate for the building’s purpose and environment can help lower overall costs while maintaining structural integrity.

Working with Experienced Contractors:

Experienced contractors have likely worked on similar projects in the past and can offer valuable advice on cost-effective construction methods. They may be able to suggest changes or modifications that could result in significant savings, such as using alternative materials or taking advantage of bulk purchase discounts.

Investing in Technology:

Using technology when constructing a commercial building can also help to reduce costs. Automated systems for project management and energy efficiency are just some of the ways to help reduce labor costs and create a more efficient workplace.

Sharing Facilities:

If there is an existing building nearby, consider sharing resources such as parking lots or conference facilities. This could result in significant financial savings for both parties.

Utilizing Value Engineering Strategies:

Value engineering involves using techniques to maximize value while minimizing cost. Examples of this include replacing standard building components with more cost-effective alternatives, such as using prefabricated walls instead of traditional construction methods.

By implementing these strategies, it is possible to save money when constructing a commercial building without sacrificing quality or safety.

Approximately Cost of Different Types of Commercial Building:

Type of BuildingSize of BuildingApproximately Cost
Small Office building5,000 Square Feet$500,000 – $750,000
Small Industrial Building10,000 Square Feet$900,000 – $1,300,000
Retail Car Dealership20,000 Square Feet$2,400,000 – $3,000,000
Small Retail Box Store50,000 Square Feet$3,500,000 – $5,500,000
Large Retail Box Store150,000 Square Feet$10,000,000 – $13,000,000
Government Admin Office20,000 Square Feet$5,000,000 – $7,000,000
Medical Office Building30,000 Square Feet$9,000,000 – $13,500,000


Building a commercial building is no easy feat and requires careful consideration and planning. With the proper timing, expertise, and guidance, the total cost of construction for a commercial building project can be kept under control.

Even though the estimated amount may seem high at first, it is important to weigh out all pros and cons before taking on such an endeavor since making good decisions from the start will save time, money, and potential problems in the future.

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Harry Thomas
Harry Thomas

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