The Most Expensive States to Build in

June 10, 2021

Commercial Construction Costs Index by State

Commercial construction costs vary greatly from state to state, though the reopening of a lot of construction projects as the COVID-19 pandemic winds down is bringing many of these costs closer together across locations. But if you're considering moving your business, it's just as important to consider the costs of building a commercial structure in another state. Let's take a look at some key factors that impact construction costs as well as states that tend to be more or less expensive in commercial construction.

Factors Impacting Commercial Construction Costs

Although there isn't a specific state-by-state comparison of commercial construction costs, we've based our breakdown on a solid index of housing and labor costs.

Location, Location, Location

Commercial construction costs are becoming more equalized across several cities after several years of standard spreads between them, according to 2021 Q1 estimates. For most situations, states with larger cities will see higher building expenses, while rural areas will have lower overall costs, though you may see more waste.

Climate Control

Locations that tend to have higher instances of severe weather will oftentimes have more stringent building codes, requiring more expense in materials and labor expertise, which is one of the reasons why hurricane-hit Florida is higher than many of the other Gulf states. Similarly, extremely hot or cold climates will require more insulation and HVAC systems, increasing cost.

Labor Costs

The difference in labor costs between locations is a key factor in determining the cost per square foot for commercial construction costs. Though you'll also see differences in union wages from city to city, there's also each city's cost of living that must be taken into account when determining labor costs, with more expensive cities having higher labor costs.

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Our State-By-State Breakdown of Commercial Construction Costs

  1. Hawaii. In a state with such high imports, is it any wonder it tops our list? Unfortunately, this makes this paradise expensive.
  2. California. Big cities, such as Los Angeles and San Francisco, drive up costs, as well as growing computer industry hotspots.
  3. Washington. Seattle's greater metro area is growing by leaps and bounds, combined with high wages, 
  4. Massachusetts. Boston has some of the highest building costs in the country.
  5. Alaska. Similar to Hawaii, Alaska has to import a lot of construction materials, which drives up construction costs.
  6. New York. New York City. Need we say more? The balancing point is the huge area of upstate with lower wages.
  7. Illinois. Chicago plus the state's location as a transportation hub makes Illinois a hot spot of expensive construction costs.
  8. New Jersey. With its small size and proximity to NYC, New Jersey gets a lot of commercial construction that drives up expenses
  9. Connecticut. As a small eastern state, Connecticut has higher construction costs due to its proximity to large cities. 
  10. Delaware. Hurricanes, proximity to DC, and a limited land base make this state on the eastern short round out our top ten.
  11. Oregon. As more people migrate from California and Seattle, Oregon's construction costs are on the rise.
  12. Colorado. Denver and all those amazing Rocky Mountain properties in Vail and Estes Park drive up the state's average.
  13. Rhode Island. Much like Connecticut, Rhode Island is well-situated between several major cities and supports a large population.
  14. Utah. This western state tends to have a combination of large cities and larger families that need big homes.
  15. Nevada. Sure, you could blame Las Vegas and Reno, which do include the bulk of the state's commercial construction.
  16. Maryland. This close to Washington DC, the homes tend to be a bit nicer and more expensive than other southern states.
  17. Arizona. Increasing snowbird populations are driving up Arizona's construction costs, along with a growing commercial sector.
  18. Florida. Hurricanes. Need we say more? Florida building codes require some serious structural strength and wind resistance.
  19. Pennsylvania. With big cities like Philadelphia and industrial hotspots like Pittsburg, inexpensive rural homes keep costs down.
  20. Idaho. Sure, there's not a lot there, but those Rockies make for cold winters and lots of insulation.
  21. Minnesota. If there was a state that screamed “add insulation to the spec” it's this friendly northern state.
  22. Wisconsin. Right next door to Minnesota, Wisconsin also gets its share of Chicago suburbanites to drive up costs.
  23. Virginia. As with Maryland and Delaware, this DC-bordering state also has a huge amount of industry.
  24. Montana. Another Rocky Mountain state, long travel distances for contractors and cold weather increase your costs.
  25. Vermont. Getting up into New England, Vermont has a cooler climate but has relatively decent construction costs.
  26. Wyoming. Cold, elevation, and distance all add up to some higher costs to build in Wyoming, though lower labor costs help.
  27. New Hampshire. Much like Vermont, New Hampshire has cooler weather but a lower population and industrial complex.
  28. Maine. The sparse population and lack of large cities mean lower costs of construction despite its northern position.
  29. South Carolina. This southern state has lower costs of living and not as many large cities, lowering its overall construction costs.
  30. New Mexico. Not as popular as its neighbor Arizona for snowbirds, New Mexico also enjoys a lower cost for building.
  31. Indiana. With a combination of larger cities and rural countryside, Indiana is still higher than its neighbors due to a cooler climate.
  32. Missouri. Though most of the rural parts of the state are fairly low, Kansas City and St. Louis drive costs up significantly.
  33. North Carolina. With a temperate climate and a lot of rural areas, North Carolina has a relatively low construction cost.
  34. Tennessee. Much like North Carolina, lower labor costs and extensive rural areas give the state low building costs.
  35. Texas. Though Texas does have a lot of large cities and population, it's spread out, giving it a lower cost than you might expect.
  36. Georgia. As is common with the deep South, Georgia has lower construction costs, though large cities drive it up.
  37. Louisiana. Louisiana also has low costs due to low labor costs and temperate to hot climate.
  38. Kentucky. With a temperate climate and low population density, Kentucky enjoys low construction costs.
  39. North Dakota. Though there is some industrial capability, North Dakota's agrarian roots show up in its construction expenses.
  40. Alabama. Starting out in our bottom 10, Alabama's rural areas, climate and limited large cities deliver low costs.
  41. Ohio. Lower costs of living and temperate climate make this state a winner.
  42. Kansas. Outside of Kansas City, most cities are fairly small and costs of living are low, keeping prices down.
  43. Iowa. With a lot of rural land and few cities, Iowa is solidly on our bottom 10 list with low construction costs.
  44. South Dakota. With no income tax and low cost of living, South Dakota attracts a lot of large corporations.
  45. West Virginia. The state's many rural areas spread out the expense of mining and industry.
  46. Michigan. Though there are large cities, the expanses of the northern end of the state balance the cost of construction.
  47. Arkansas. A temperate climate and easy access to small cities make this Wal-Mart home inexpensive to build in.
  48. Nebraska. With wide-open spaces and low costs of living, Nebraska has low construction expenses.
  49. Mississippi. A large rural population provides plenty of inexpensive labor.
  50. Oklahoma. With a great deal of open prairie, ease of permitting, and low cost of living, Oklahoma delivers solid value.

Though you may not be undertaking the most expensive construction projects in the world, the location where you're building can have a big impact on the cost of your project. If you're building a new home for your business or expanding into a new market, you can enjoy accurate estimates of your construction project, wherever it's located, when you work with the 1build Cost Estimating Service. Work with experienced estimating professionals who can help ensure that your next project is profitable.

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