Rule of Thumb High-Rise Construction Costs?

What do you typically plug in early underwriting for vertical/site work on ~20 story apartment buildings in dense area's? Specifically looking at a large Sunbelt MSA.

Comments (14)

Most Helpful
Jan 15, 2022 - 11:50am

Such a broooooad question so instead of telling you that "it depends", I'm going to give you a broad answer. This is what was I doing back when I worked for a large multi developer that did high rises. 
 

Probably $275-$300 psf building costs. Maybe add another $15k-$20k per parking space assuming a parking deck. This is what it was costing us before I left. Some firms might be able to get these costs cheaper (we had a reputation for having high build costs for whatever reason). Obviously very dependent on location. I imagine it could be cheaper to build a high rise in Nashville than Miami.

Jan 20, 2022 - 9:32am

You really need to understand that this can't be used as a rule of thumb at all times and across markets - high rise construction costs for above-grade costs alone have gone up like $30-$40/sf over the last 2 years alone (more in some markets). That $300psf is likely only for the above grade costs, you also need to account for site work and below grade parking (if included).

In terms of parking ratio, that is 100% market dependent. In one market it may be less than 1.0 while another requires 1.4. Development is not a field where you can really apply a "rule of thumb" to underwriting, you really need to do your research and speak with consultants.

Jan 19, 2022 - 1:17pm

$300/SF (assuming we are talking gross SF) would be high for just the HC number is my guess. I just priced out a 13-story tower (underground parking) with union construction and the HC number was around $200/SF. Different markets so not completely comparable, and if it's Miami that'll be more expensive than a Charlotte. That being said, every certain number of floors added increases the cost to build, so maybe the jump from 13 to 20 stories is significant. 

Jan 19, 2022 - 11:48am

$300 PSF is way low for Type I high-rise construction. Agree there are a lot of factors here with biggest drivers being do you have underground parking? What is average unit size? Is it a market with higher/union labor costs? CA high rise is pushing almost $600 PSF. Phoenix/TX easily pushing $400+. For context, we just bought out a Type V surface parked deal in Phoenix at $210 PSF and a 5-story wrap deal in TX with a precast garage at $230 PSF. 

Jan 19, 2022 - 3:51pm

Autem dicta quo et et et nihil explicabo. Dolorum natus est repudiandae quidem magnam necessitatibus. Rem placeat debitis ut et unde aperiam voluptatibus dolor. Accusantium ipsa deserunt deleniti totam enim accusantium et. Cumque molestias quia omnis.

Nostrum qui porro qui velit dolore praesentium. Culpa ut odio ut repudiandae asperiores provident molestiae qui. Tempora quaerat debitis saepe alias temporibus error. Ut accusamus nesciunt et eveniet explicabo ipsum deleniti.

Quia aperiam quaerat voluptatem minus molestiae. Quaerat et aut amet. Esse nihil optio nihil suscipit debitis necessitatibus beatae ut. Autem quis asperiores et quidem.

Start Discussion

Total Avg Compensation

January 2022 Investment Banking

  • Director/MD (5) $604
  • Vice President (22) $385
  • Associates (147) $240
  • 2nd Year Analyst (84) $153
  • 3rd+ Year Analyst (15) $150
  • 1st Year Analyst (295) $142
  • Intern/Summer Associate (64) $142
  • Intern/Summer Analyst (225) $90