Printed from at 03:06 PM, Jan 18 2017
Talk » Market » Discussing 'Construction and Land Costs Per Square Foot'

Construction and Land Costs Per Square Foot


Does anyone know how much it costs to develop new construction on a price per square foot basis? Probably hard and soft costs.

I'd like to get an idea as to how over, under or fairly priced existing apartments are relative to what might be considered replacement cost.



I'm flexible as to parameters. But let's speak about good Manhattan neighborhoods, good quality - but not necessarily designer, top-of-the-line. Are there other parameters you need?

Are we talking about a 6 unit or 160 unit building? Is it residential or commercial? Are you including the land? And will you be able to get financing?

Location (specific as zoning matters)
Construction type

Is the land vacant? Demolition? Site size and orientation. I could come up with a list of 100 questions easily. These guys might be able to offer insight

I'm just trying to get an indication of total construction costs per square foot versus typical pricing I might see on Streeteasy for say a new 50-unit residential apartment to be constructed on say a parking lot - including land. An area example could be west Chelsea around the gallery district. (Feel free to parameterize the example with your own example.)

Not looking for anything fancy or precise.

I'm just guessing construction and land costs might come out to something like $700 per square foot - but would like to get perspective/information from people more knowledgeable about this sort of thing than me.


I think that this is a great question, and have never gotten a good answer when I have asked it. Please see the data that I have compiled below. Also, it is worth noting that the land cost is a significant portion of the cost and that land cost in manhattan has gone up with apartment prices. It clearly could go down if apartment prices go down.


There was some data on this thread:


A 2004 report (Why is Manhattan So Expensive?" by Glaeser, Gyourko, and Saks) by several Ivy League professors had the following quote:

"We document a large gap between the market price of condominiums and the marginal
cost of producing another floor of such units in Manhattan. In recent years, average
condominium prices have exceeded $600/ft2. Data on physical construction costs
suggests that the upper bound for a high quality, luxury-type condominium unit in this
market is less than $300/ft2. If it costs $300 per square foot to build an extra apartment
that sells for $600 per square foot, this would seem to offer an irresistible arbitrage
opportunity for developers. In addition, other evidence for this market also consistently
supports our contention that the high ratio of prices to construction costs is the result of


The following quote came from the Archstone 2/2007 quarterly earnings call:

The last aspect of our business I would like to cover is the tremendous value creation through our development activities. One excellent example is Archstone Clinton in Manhattan, which represents a total expected investment of approximately $313 million, which equates to a cost basis of approximately $500,000 per unit. I already mentioned the replacement cost for this type of location in Manhattan today would be in the $900,000 per unit range, which is a huge spread to our cost basis.

I seem to remember the analysis of that 2004 report - very interesting - the high cost is attributed to "regulation" the headache of going through the permit & development process with NYC housing board. The question is how much of a premium developers are going to need to continue to develop if housing prices drop. Interesting economics question.

More data...

Recent New York Building Congress report had this quote:

"Total construction costs for high rise office towers can exceed $400 per square foot (psf) in New York City, compared to $180 psf in Chicago;"

Here is the link:

you might like this article written by Lauren Elkies of The Real Deal:

ali r.
{downtown broker}

Another quote about office construction costs from report linked above:

In 2007, the hard costs of constructing a high-rise New York
City office building ranged between $285 and $375 psf,
compared to a $230 psf average in 2003 and roughly $120
to $130 psf in the mid-1990s. Today’s costs represent a
50 percent increase from four years ago and reflect a 150
percent differential over the hard costs for a comparable
office building in Chicago. When contingencies, general
conditions, insurance, subcontractor bonds and construction
management fees are added, the total project costs for
high-rise office buildings in New York can exceed $400
psf – exclusive of soft costs, land costs and developer

Front_porch... very interesting article. thanks for posting.

Thanks, all; 10105, in particular.

Let's assume it costs around $400 per square foot to construct an average residential apartment today.

I think you then have to add land costs. I believe these tend to run in the area of $200 per square foot. But presumably that figure can be amortized over all the floors so it isn't a huge factor.

Kind of makes you edgy about paying $1,200 a square foot for your new apartment.

Maybe that's why I see so many cranes across the skyline.

Maklowe's Drake Hotel site will probably be foreclosed on by the bank and the anticipated sale price for the raw cleared land as stated in the news yesterday was $1000 per buildable square foot!!!! I know that it is Park and 56-57th street, but that would mean minimum of $2500(probably $3000-4000) per foot asking price on a for sale condo.

Park Avenue is Park Avenue.

I'm going to guess that most of us don't live on Park Avenue. I'm sticking with my typical $200 per square foot land cost for a more typical "good" Manhattan neighborhood. That said, keep in mind that your indicated $1000 per buildable square foot cost gets spread across many floors - say 20 - in which case the "effective" land cost per square foot of condo is far lower - $50 per square foot in my 20 story building example.

$50 + $400 construction cost = $450 per square foot hard cost. I'm guessing a builder could still make a tidy profit on that.

So, it's "Build, baby, build!" More and more supply in the face of a buyers' strike.

We live in interesting times.

Maybe I'm wrong but the info that i quoted was not $1000 a foot. The article said it was $1000 per buildable foot. All I am doing is repeating the info. I'm not commenting if it is reasonable or even conceivable to consider a developer buying property with such an immense upfront cost. Actually I was blown away that the article wrote that in this or any market. But then as you suggest, Park Ave is Park Ave and will always have a market.

Dont know what topper is talking about re: amortizing land over all floors. 200/foot is a reasonable to low estimate cost of land per buildable square foot, so just add it to your trades and other hrad costs (general conditions, cm fee, bonds, permits etc) as well as financing fees/interest, architectual and engineering sosts, etc. most neighborhood in manhattan would be minimum of 650/sf and could be several hundered per sf more in land and trades depending on the site - many neighborhood have land that starts at 350/foot and due to site contrainyts and design would have trade costs well over 400/foot.
keep in mind the costs are generally per gross sf (sometimes zoning sf) but the sales prices are per sellable square foot. deoending on the layout, this is +/- 80% of gross. so a building with a sellout of 1200/sf on sellable square footage is more like 1100 after brokerage fees and costs of maintaining the bulding untell the sellout, and that 100/sf is actually 880 per gross square foot. that 880 should be compared to the 650, 800 or whatever your gross square foot cost assumptions is to determine gross profit before taxes.


Pls. help me to understand what you are saying.

Let's work with the $200 figure I mentioned earlier. (I'm near the gallery district in Chelsea.) That works out to $8.7 million per acre. My understanding is that that refers to the raw land. Say a parking lot that is near me. If I build a four-story building, I would think that the effective cost per square foot (excluding your adjustments) is $50 ($200 / 4 Floors). If I build an eight-story building, I would think that the effective cost per squre foot (once again excluding your adjustments) would be $25 ($200 / 8 Floors).

Am I incorrect in my understanding?


not if the 200 / foot really is for land - but that would be incredibly cheap by manhattan standards given wide range of zoning allowed. the 200+ / foot you are using is definitely a per buildable or per zoning square foot number - not per 2 dimensional lot size square foot.

if a lot size is 5,000 sf and teh permiting zoning is 4xFAR or allows more or less a 4 story building with no set backs, the buildable square footage (and lets say zoning too although that would adjust for shafts, mechanicals and below grade space) is about 20,000. the 200 psf is on the 20,000 - most decent neighborhoods that would currentky be a very good price (low) - although that might change! the price would be 4 million.

Thanks for the lesson, Spiderman!

That was very useful for my understanding. So, presumably the price of land is largely a function of zoning and how many stories you are allowed to build.

If I understand your numbers then, you might be more comfortable with a land cost of say:

$250 PSF

and a construction cost of:

$700 PSF

For a total "hard" (as I understand it) cost of say $950.

In which case a say $1,200 PSF sales cost would be fairly reasonable - and provide a "floor" of sorts under current market prices? (Presumably, land and construction costs could fall - but I don't think they have so far for Manhattan.)

Many thanks.

Very interesting. Thanks, spiderman.

Commodity prices seem to be plumetting. Can't help but think that construction costs will soon be easing. In addition, I think that land costs are considerably more volatile than real estate prices in general. Seems like they should be easing as well.


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