Retail has had a difficult time lately, which has naturally had an influence on the retail construction industry. However, with a positive growth estimation for the retail sector moving forwards, we can be confident to see construction businesses follow suit. […]There are plenty of changes and adjustments to be made, and companies will be relying on the buildings to provide a seamless, pleasant journey for their customers – now more so than ever.
So, you’re ready, excited, a little nervous, and considering your retail construction costs? If you’re new to the scene, you’ll need to know a few basic facts. Commercial or retail buildings, compared to property development, will need to hold up differently. These buildings should be able to cater to hundreds of daily visitors, in rain or shine. Stronger, sturdier materials will be essential, and your construction will take more time and more workers. You can learn more about design and new strategies in this article – which is geared towards retail construction in a post-pandemic world.
This article will explore the different financial elements you’ll need to consider to get you started on building out your retail dream come true.
exterior retail construction costs
Once you have a coherent understanding of the commercial construction process from start to finish, the first tangible parts to consider of the build itself are the ‘shell’ construction costs. These are the most basic components which make up the building:
- Windows and Doors
Of course, you’ll have economic and location conditions to consider, and your retail construction costs plan should take market trends, adaptations in building materials, approaches and practices into discussion.
Building in Calgary compared to Vancouver, Edmonton, Toronto or Montreal can diversify the cost dramatically. For example, to build a supermarket in Vancouver, as a vague estimate, will cost you roughly $180 – $230 per square foot, whilst a supermarket in Montreal is around $130 – $180 per square foot.
This kind of sliding scale can also be applied to different areas within a city, so you’ll need to think very carefully about where you position yourself. Thinking about your life cycle is important, so remember to keep repeating the words ‘return on investment’ when adding up your retail construction costs. What might seem like a strategic way to save some dollars now: by choosing an area based on budget, you could be signing yourself up for a bigger loss, when your customers have to travel further afar to get to you.
Interior Retail Construction Costs
The secondary costs to consider after the ‘shell costs’ are typically known as the ‘hard costs’. Important pieces to consider in your retail construction costs planning, whether you’re starting entirely from scratch, or your project is more of a ‘build out’ or ‘extension’ on an existing building. ‘Hard costs’ are considered the building materials, manual labour and landscaping. Your hard cost list should include:
- Lighting and Electrical
- Equipment Installation
- Heating, Ventilation and Air (HVAC)
‘Build outs’ in construction usually trade more foot traffic, therefore revenue, for more space, or square footage. This includes fresh licks of paint, re-modelling the walls, windows, doors – as well as extensions.
Delivery of building materials is usually a separate cost, unless your chosen construction company includes this delivery service. The materials can usually be purchased in mass.
The fee for labour is a separate cost: either paid by the hour, or per square foot of ‘labour’. These wages are usually negotiable, and will be confirmed before the start of the build.
Understanding these different areas of costs, when mapping out your lists of materials and labour workers, is a good place to start when compiling your budget for the first time.
Always take some time to research different contractors and understand what ‘full service’ general contracting means to each company. If you choose the right contractors, you’ll feel as though you are in safe hands. They will be able to help you with ironing out some of these cost details. Make sure you are working with people who understand your vision, and can prioritise your demands and budget.
Retail Construction Soft Cost Checklist
Never underestimate the importance of the soft cost checklist, it makes up for a chunky segment of the overall construction costs. Typically considered less tangible parts, such as legal/inspection fees, project management, permits, taxes or architect fees. Generally speaking, the soft cost checklist makes up around 30% of the total.
This also includes land costs, acquisition and real estate research, fees, lot assessment and transaction costs.
Professional Service Fees & Feasibility Plans
This includes the cost of architects, engineering and consultants. Feasibility plans, design work and planning. The cost of these fees and services will largely depend on the retail construction size.
Building/Municipal Inspection Fees & Permits
Permits will need to be paid to your local government, and inspection fees will also ensure you have full legality and authorisation of your build project.
A seperate project management service can make a big difference to your retail construction build. To ensure all stakeholders are included and informed of progress, all phases are monitored, and generally to ensure everything runs smoothly and on time.
Some other soft cost areas include: construction equipment rental, environmental studies and assessments, health and safety consultants and PR and advertising.
There is an ever growing need to be sustainably responsible in the construction and retail industries. Being one of the key driving factors, it’s essential to get this part right, for your carbon footprint impact, and for every future client and customer relying on retailers to make strong, progressive ethical and environmental choices. This could mean making reductions to your supply chain where necessary, or it could be in the ways in which you construct your retail building. This business model theme is only going to become increasingly important in the years to come. The retail sector specifically is constantly evolving to keep up with demands. Having this in the forefront of your mind, when planning your budget and retail construction costs, will direct the future of retail towards positive change.