We often tout our low cost business climate in South Dakota and construction costs are no exception. Whether talking residential or commercial construction, South Dakota costs run about 75-80% of the national average, saving residents and businesses a lot of money.
If you sat in on the Make Your Case with Data session at the GOED Conference, we touched on a resource called RSMeans Square Foot Costs. It’s a publication used by building contractors to estimate construction costs and shows South Dakota in a great light.
RSMeans is broken into three sections:
- Residential Models
- Commercial/Industrial/Institutional Models
- Location Factors
The residential section provides cost-per-square-foot estimates on four different building classes (economy, average, custom, and luxury) and eight different building types (one story, one story with finished attic, two story, bi-level, etc). Other considerations include the type of exterior wall, the frame, basements, and several modification and adjustment options.
The commercial section provides cost-per-square-foot estimates for 75 model buildings ranging from apartments to bowling alleys, factories to libraries, and gymnasiums to offices. You can even price out a community swimming pool.
The cost estimates in both the residential and commercial sections establish your base costs and are considered nationwide averages. The third section, location factors, is where we get to localize these costs.
The location factors section lists an index value meant to be a percentage of the national average. Locations are alphabetized by state and then sorted according to zip code within the state.
The following South Dakota communities have location factors in the RSMeans Square Foot Costs book:
- Sioux Falls
- Rapid City
For residential construction, location factors for South Dakota communities range from 73-78% of the national average. For commercial construction, South Dakota communities range from 81-88%.
So how can we use this? Here is a scenario:
- A company comes to you planning to construct a 30,000-sf Factory (1 Story) with a steel frame and concrete block walls. The average per square foot cost is $124.75 and the total cost is $3,742,500.
- The company is looking at Rapid City, SD (LF = 0.83) and Colorado Springs, CO (LF = 0.93).
- Building a new facility in Rapid City, SD will cost 83% of $3,742,500 or $3,106,275.
- Building a new facility in Colorado Springs, CO will cost 93% of $3,742,500 or $3,480,525.
- By locating in Rapid City, SD, the company could save $374,250 on construction costs.
The GOED has used the above approach to calculate broad cost comparisons for trade show publications and utilized it in bottom line comparisons. We’ve also used just the location factors to illustrate cost differentials when we’re in the early stages of a project and don’t have a lot of detail:
- Sioux Falls LF = 82%
- Minneapolis LF = 109%
So there are several approaches that can be taken to utilize this data.
Of course, we all know there are hundreds of factors that can impact the cost of construction so any costs calculated using the RSMeans Square Foot Costs are a baseline and subject to change. It’s good to note that when sharing this information.
Categories: Data Tools