Building Costs Per Square Foot in the State of Pennsylvania, USA

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Building Costs Per Square Foot in the State of Pennsylvania, USA

  • Construction Outlook in Pennsylvania

  • Cumming Report Philadelphia 2021 – Construction Market Analysis – Third Quarter

  • Cumming Report New York 2021 – Building Costs Per Square Foot in Philadelphia

  • Building Costs Per Square Foot in the State of Pennsylvania for Luxury, Semi-Luxury, Best Standard, Good Standard, Average Standard and Minimum Standard Homes Single Family Homes

  • List of 36 Cities in Pennsylvania – Percentage Deviation of the City/Town Building Cost from the National Average ($X), in Descending Order.

  • Cheapest and Most Expensive Places To Build in Pennsylvania.

3 Bedroom House with 3 Bathrooms Gross Floor 2120 sqft Weaver Drive_Lititz_Pennsylvania_17543 Price 459900 USD

Newly Built House Completed in 2021 – With 3 Bedrooms, 3 Bathrooms and 2 Attached Garages (Gross Floor Area – 2120 sqft) on Weaver Drive, Lititz, Pennsylvania 17543, USA – Price $459,900 USD

Building costs in Pennsylvania are 1% lower than the national average, cheaper than 23 states in the USA. Just like other states in the United States, the state of Pennsylvania was hit by the Covid-19 pandemic in 2020, sending the rate of unemployment up the roof in many sectors including construction. In the construction industry, the affected sectors were residential and commercial building which saw many projects come to a standstill, paused and shelved for months, with both new and proposed projects being discontinued or cancelled. The other sectors remained resilient to the Covid-19 induced recession, namely capital infrastructural projects, K-12 education and healthcare. Projects in these sectors continued throughout year or resumed immediately on May 1 after the six-week shutdown beginning in March 19 with little to no impact.

Growth forecasts have been revised in the wake of Covid-19. According to the American Institute of Architects (AIA), non-residential construction is expected to see a -11% decline in spending, a reversal from a projected +1.5% increase. Commercial construction is expected to see a -14% decline in spending, a reversal from a projected +0.6% increase. Projects in education, healthcare, public works and other institutions are expected to see a (-7%) decline in spending, a reversal from a projected +2.9% growth.

Institutional projects will spur construction activity in the state of Pennsylvania as evidenced in nationwide trends, while commercial projects (hotel and retail) will decline. Covid-19 might have contributed to a rise in unemployment as projects came to a standstill, but traditionally there are abundant jobs in the construction sector which are hard to fill. This scenario was apparent post-Covid, with a shortage of labour across the country including Pennsylvania, where more than 400,000 jobs are still vacant despite good hourly rates which are two times higher than the hospitality industry.

Philadelphia is the largest city in the state of Pennsylvania. According to Arcadis International, Philadelphia was the 14th most expensive city to build in the world in 2020. Building costs in Philadelphia dropped on the international chart in 2021 as the city declined to number 18 in the world.

Construction Outlook in Pennsylvania – AGC / Sage Construction & Real Estate

According to the 2021 construction outlook survey for Pennsylvania by the Associated General Contractors of America (AGC). On the overall, there was a negative outlook in the value of projects expected in 2021.

Negative Outlook

54% of contractors expected a decrease in the value multi-family home projects.78% expected a decrease in the value of private office space. 83% expected a decrease in the value of holiday accommodation and lodging. 94% of contractors surveyed expected a decrease in retail projects. 71% expected a decrease in public building projects. 92% expected a decrease in K-12 educational facilities. 76% expected a decrease in higher education facilities. 53% expected a decrease in warehouse building. 43% expected a decrease in hospital building.44% expected a decrease in clinic and healthcare support services. 73% expected a decrease in transportation infrastructure projects. 73% expected a decrease in bridge/highway projects. 57% expected a decrease in water/sewer reticulation projects, and 57% expected a decrease in industrial building.

Positive Outlook

Warehouse building had the highest expectations at 40%, followed by industrial building at 29%. In third place was clinic and healthcare support services at 25%, followed by hospital projects at 19% and higher education facilities at 18%. 11% of contractors surveyed expected an increase in private office building. 8% expected an increase in multi-family residential building, 7% expected an increase in public building, 6% expected an increase in retail projects. No contractor expected a positive outlook in K-12 educational building and holiday accommodation.

Consistency Outlook

In most construction categories, consistency predictions were much higher than those who expressed a positive outlook, although the majority of contractors had a negative outlook for 2021.

38% of contractors surveyed expected the value of multi-family residential and hospital projects to remain the same in 2021. 36% expected water/sewer reticulation projects to remain unaffected. 31% of contractors expected the value of clinic and healthcare support services to remain the same. 27% expected no change in the value of transportation infrastructure. 20% expected no change in the value of bridge/highway projects. 21% expected public building projects to remain the same. 17% expected hospitality projects to remain the same. 14% expected the value of industrial building projects to remain the same. 11% expected private office projects to remain the same. 8% of contractors surveyed expected no change in the value of K-12 educational projects. 7% expected the value of warehouse projects to remain the same. 6% expected no change in the value of higher educational projects. No contractor expected a change in the value of retail projects.

Headcount

48% of contractors expected a decrease in headcount, while 26% expected no change and the same number expected an increase. 26% had a hard time filling in positions for staff and skilled labour. The same number had no difficulty in filling these positions.  48% of contractors said they had no openings for these positions.

11% predicted filling in current positions will remain hard in 2021, 7% said it will be much harder, 44% said there will be no change and 4% said it will be easier to fill in positions in 2021.

Effects of Pandemic, Labour Shortages and Pay Rates on Projects

Due to labour and personnel shortages, 52% of contractors said they increased benefits and basic remuneration to attract applicants. 33% did not change the base pay and 11% reduced pay rates. 7% provided benefits and incentives, while 7% eliminated or reduced benefits.

Due to the Covid-19 pandemic, 48% of contractors said shortage of staff and skilled labour has increased the cost of doing business. 74% said this has delayed project completion, and 30% of contractors have increased their tender rates, while 22% have reduced their tender rates. Due to staffing challenges and shortage of labour, 11% of contractors surveyed said they have increased their project completion times in bid contracts.

In 2020, 54% of contractors surveyed said their projects had been postponed to 2021. 46% said their projects were cancelled with no postponement, and 19% said their projects are ongoing, with no cancellation or postponement.

Biggest Contractor Concerns

The impact of Covid-19 on projects, availability of human resources and suppliers was the biggest concern among Florida contractors going into 2021, with 89% of respondents expressing this view. The second biggest worry among contractors was the Covid-19 insurance claims filed by workers (48%). The third biggest worry was the lack of high quality workers and increased competition in bidding (44%). This was followed by lack of infrastructural capital financing and lack of projects in the private sector (41%). 37% of contractors surveyed expressed concerns about rising material costs. 33% were worried about shortages of labour. 30% were concerned about federal regulations as well as lack of capital for public building projects. 26% were worried about local authority regulations by the state and municipalities, as well as the cost of various services like insurance and trucking. 22% expressed concerns about site safety, poor training and education, as well as relationships with subcontractors, owners and vendors. 19% of contractors were worried about increased labour costs. 15% were concerned about the availability and quality of subcontractors.

Amount of Work Done and Number of Employees

About 77% of contractors surveyed said they have done $50 million worth of projects or less during the year 2020. 23% have done projects between $50 million and $500 million, and none of the contractors have done projects over $500 million. Most construction firms (54%) have 20 to 99 employees, 4% have 500 or more employees, and 23% have 100 to 499 workers in their employ.

Cumming Report Philadephia 2021 – Construction Market Analysis – Third Quarter

Cumming Report Philadelphia 2021 – Construction Volume by Sector – Third Quarter

The chart below shows the annual construction volumes by sector between 2016 and 2020, as well as the projections from 2021 to 2023. There was $4,604 million worth of residential construction projects in 2016, followed by a decrease in volume in 2017, valued at $4,763 million. The decline continued in the following year, finishing off at $4,319 million in 2018. The volume of residential construction projects decline further in 2019 to $4,123 million, before increasing to 4,923 million in 2020 and rising to the highest ever at $5,391 million in 2021. The total volumes of residential construction are projected to decline to $4,704 million in 2022, and $15,990 million in 2023 due to the Covid-19 pandemic.

Construction Market Volume by Sector_Philadelphia (1).pdf

Construction Market Volume by Sector_Philadelphia

Annual construction volumes in commercial building were as follows between 2016 and 2020, and 2021 to 2023. There was $2,842 million worth of office, retail and hospitality building projects in 2016. The volume increased to $2,922 million in 2017 and $2,975 million in 2018. The volume decreased to $2,873 million in 2019 which was the beginning of a four-year decline projected to 2023. In 2020, the total volume of commercial construction projects decreased to $2,666 million due to the Covid-19 pandemic. A further decline is expected in 2021, projected to $2,416 million, and finishing off at $2,309 million in 2023.

Residential projects contribute the largest volume in the construction market in terms of aggregate contract amounts, followed by infrastructure which is roughly 87% of the volume of residential projects. In third place is commercial building which is 62% of the volume of residential projects, followed by the education sector which is 57% of the volume of residential projects. At the bottom is the manufacturing and healthcare sectors which are roughly 19% of the volume of residential construction.

Cumming Report Philadelphia 2021 – Annual Construction Volume (All Sectors) Philadelphia

The chart below shows the combined volumes in all sectors (residential, commercial, manufacturing, healthcare, education, infrastructure and other). In 2016, there were $17,184 million worth of construction projects, which declined to $17,019 million in 2017 and $16,531 million in 2018. The decline in volumes continued to $16,444 million in 2019 and increased to $17,056 million in 2020, remaining stable at $17,055 million in 2021. Volumes declined to $16,262 million in 2022 and $15,990 million in 2023.

Annual Construction Volume_Philadelphia (2).pdf

Annual Construction Volume_Philadelphia

Cumming Report New York 2021 – Construction Spending Index in the State and City (Pennsylvania and Philadelphia)

The chart below shows the construction spending index from 2012 to 2021 and projected to 2023. The city, state and national spending indices are compared between this period. Between 2012 and 2021, the construction spending index in the state of Pennsylvania hovered between 0.9 and 1.07. It is projected to remain stable from 2021 to 2023, hovering between 0.9 and 1.0

Construction Spending Index_Philadelphia (3).pdf

Construction Spending Index_Philadelphia

The construction spending index in the city of Philadelphia hovered between 0.97 and 1.12 over the 11 year span projected to 2023. As shown in the chart, the Philadelphia spending index is above the state curve, with the deviation widening as one moves along the span. This indicates that construction spending in the city of Philadelphia is much higher than the state average. The national construction spending index in the USA is way higher than the Philadelphia and Pennsylvania index.

Cumming Report New York 2021 – Major Construction Projects in Philadelphia

The chart below shows the top 10 biggest construction projects in Philadelphia as at 2021. The aggregate volume of these projects is $1709.5 billion. There are two mega projects contributing $1694.5 billion (99%) of the total valuation in the state. These are the Philadelphia International Airport Terminal and the Jefferson University Health Specialty Care Pavilion valued at $932.5 billion and $762 billion respectively. The third most expensive project is the Philadelphia 30th Street Station District project valued at $6.5 billion. In fourth place is the King of Prussia Rail Project valued at $2.0 billion. The New Inpatient Tower (Children’s Hospital of PA) comes fifth at $1.9 billion. This is followed by the PA International Airport Airfield Improvements project at $611 million. In seventh position is the Piazza Terminal Apartments Project and the Spring Garden Street Mixed Use Development valued at $500 million. The eighth most expensive project in Philadelphia is the Clinical Collaboration Hub at the PA Children’s Hospital valued at $492 million.

Cumming Report New York 2021 – Building Costs Per Square Foot in Philadelphia

The chart below shows the building costs per square foot in Philadelphia for residential, commercial, healthcare, educational, public, community and industrial buildings including parking. The cost of building detached single family homes of medium quality ranges from $254 to $304 per square foot, whereas mid-rise apartments and condos will take $393 to $512 per square foot to build.

 

Building Costs Per Square Foot for Single Family Homes in the State of Pennsylvania, USA

The quality of a house is determined by the type of materials used and the architectural design. In the United States, the following types of private dwellings are found in the market:

Class 1 – Luxury homes

Class 2 – Semi-luxury homes

Class 3 – Best standard homes

Class 4 – Good standard homes

Class 5 – Average standard homes

Class 6 – Minimum standard homes

In residential/housing projects, the construction cost per square foot is inversely proportional to the contract sum of the project. That means the construction cost per square foot will increase as the project value decreases, and the square foot cost will decrease as the project value increases. How is this? Builders’ pricing habits have a bearing on the square foot cost, which also includes the contractor’s profit and overheads. In a small building project, contractors have to factor in the risk of under-pricing, loss, profit erosion and being stuck on breakeven point. Thus, a higher profit margin is needed in this case to mitigate the risks. Larger projects with a huge contract sum are safe for contractors in terms of the amount of profit and cushion for risks. The building costs below were last updated in December 2020:

Class 1 – Luxury Single Family Homes

The building cost per square foot for luxury private homes in Pennsylvania ranges from $341.44 to $523.41 per sqft, with the average being $402.95 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 1 Luxury Single Family Homes Building Costs Pennsylvania

Class 1 Luxury Single Family Homes Building Costs Pennsylvania

Class 2 – Semi Luxury Single Family Homes

The building cost per square foot for semi-luxury private homes in Pennsylvania ranges from $207.51 to $318.09 per sqft, with the average being $244.89 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 2 Semi Luxury Single Family Homes Building Costs Pennsylvania

Class 2 Semi Luxury Single Family Homes Building Costs Pennsylvania

Class 3 – Best Standard Single Family Homes

The building cost per square foot for best-standard private homes in Pennsylvania ranges from $134.15 to $203.75 per sqft, with the average being $157.06 per sqft. As the bar chart shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 3 Best Standard Single Family Homes Building Costs Pennsylvania

Class 3 Best Standard Single Family Homes Building Costs Pennsylvania

Class 4 – Good Standard Single Family Homes

The building cost per square foot for good-standard private homes in Pennsylvania ranges from $97.90 to $150.13 per sqft, with the average being $115.54 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 4 Good Standard Single Family Homes Building Costs Pennsylvania

Class 4 Good Standard Single Family Homes Building Costs Pennsylvania

Class 5 – Average Standard Single Family Homes

The building cost per square foot for average-standard private homes in Pennsylvania ranges from $79.47 to $121.70 per sqft, with the average being $93.71 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 5 Average Standard Single Family Homes Building Costs Pennsylvania

Class 5 Average Standard Single Family Homes Building Costs Pennsylvania

Class 6 – Minimum Standard Single Family Homes

The building cost per square foot for minimum-standard private homes in Pennsylvania ranges from $62.68 to $96.07 per sqft, with the average being $73.94 per sqft. As the bar graph shows below, bigger homes with a large gross floor area have the lowest building costs per ft2, and smaller homes with a small gross floor area have the highest building costs per ft2. Medium-sized homes are somewhere in between. Generally, the building cost per square foot decreases as the size of the house gets bigger, and increases as the house gets smaller.

Class 6 Minimum Standard Single Family Homes Building Costs Pennsylvania

Class 6 Minimum Standard Single Family Homes Building Costs Pennsylvania

List of 36 Cities in Pennsylvania – Percentage Deviation of the City/Town Building Cost from the National Average ($X), in Descending Order:

There are 2560 municipalities including 56 cities grouped into 67 counties in the state of Pennsylvania. The bar chart below indicates that building costs vary in each city/town. The construction cost per square foot in each of these cities varies from the state and national average by a certain percentage based on the location factor also known as the local modifier.

The building costs for single family homes in this post include all Bills of Quantities with the exception of HVAC installations. So the total costs include all construction trades, electrical installation, plumbing, built-in cupboards, plumbing fittings, local authority fees and permits, utility connections (water, gas, sewer etc), professional fees (architect, engineers etc.), contingency sum, contractor’s profit, attendance and overheads. The Location Factor represents the value of the local construction index, i.e. variation in the cost of labour, materials and supervision. In working out the building costs per square foot, the cost of land, existing infrastructure, land servicing, allowance for escalation, interest costs, parking and loose furniture are not included in the estimate. Ground conditions are assumed to be normal for estimating purposes, but for your own project, you have to factor in ground conditions, weather and climate because no two projects are the same.

The percentage deviation of building costs from the National Average for each city in Pennsylvania is shown below.

If $X is the Average National Building Cost in the USA, then it will cost the following to build a residential property in each metro city/town in Pennsylvania:

Pennsylvania Average -1% (1% less than X)

Allentown 181 (3%)

Altoona 166 (-8%)

Beaver Springs 178 (-5% )

Bethlehem 180 (4%)

Bradford 167 (-8%)

Butler 160 (-2%)

Chambersburg 172 (-7%)

Clearfield 168 (-3%)

DuBois 158 (-10%)

East Stroudsburg 183 (-5%)

Erie 164-165 (-6%)

Genesee 169 (-4%)

Greensburg 156 (-4%)

Harrisburg 170-171 (3%)

Hazleton 182 (-3%)

Johnstown 159 (-9%)

Kittanning 162 (-6%)

Lancaster 175-176 (-1%)

Meadville 163 (-9%)

Montrose 188 (-4%)

New Castle 161 (-3%)

Philadelphia 190-191 (11%)

Pittsburgh 152 (6%)

Pottsville 179 (-8%)

Punxsutawney 157 (-3%)

Reading 195-196 (2%)

Scranton 184-185 (1%)

Somerset 155 (-9%)

Southeastern 193 (8%)

Uniontown 154 (-6%)

Valley Forge 194 (11%)

Warminster 189 (11%)

Warrendale 150-151 (5%)

Washington 153 (8%)

Wilkes Barre 186-187 (-1%)

Williamsport 177 (-2%)

York 173-174 (-1%)

The City List above as well as the Bar Graphs below show that DuBois is the cheapest city to build a private home in the state of Pennsylvania, and three cities Philadelphia, Valley Forge and Warminster are the most expensive cities to build a home. Building costs are -10% below the national average in DuBois and 11% above the national average in Philadelphia, Valley Forge and Warminster.

Deviation of City Building Costs from National Average Pennsylvania_Ascending Order

Deviation of City Building Costs from National Average Pennsylvania_Ascending Order

Deviation of City Building Costs from National Average Pennsylvania

Deviation of City Building Costs from National Average Pennsylvania

Cheapest Places To Build in Pennsylvania:

DuBois is cheapest to place to build at -10% below the national average, followed by Johnstown, Meadville and Somerset at -9% below the national average. The third cheapest place to build a house are Altoona, Bradford and Pottsville at -8% below the national average, followed by Chambersburg at -7% below the national average. The fifth cheapest place to build are Erie, Kittanning and Uniontown at -6% below the national average, followed by Beaver Springs and East Stroudsburg at -5% below the national average.  The seventh cheapest place to build a home is Genesee, Greenburg and Montrose at -4% below the national average. The eight cheapest place to build a home are Clearfield, Hazleton, New Castle and Punxsutawney at -3% below the national average. The ninth cheapest place to build a home are Butler and Williamsport at -2% below the national average. The tenth cheapest place to build a home are Lancaster, Wilkes Barre and York at -1% below the national average. Building costs in these three cities are equal to the State Average.

The eleventh cheapest place to build a home is Scranton at 1% above the national average. The twelfth cheapest place to build a home is Reading at 2% above the national average. The thirteenth cheapest place to build a home is Allentown and Harrisburg at 3% above the national average. The fourteenth cheapest place to build a home is Bethlehem at 4% above the national average.

Expensive Places To Build in Pennsylvania:

If anything between 5% and 10% is considered expensive, then there are four such cities in the state of Pennsylvania. Building a house in the city of Warrendale is 5% more than the national average. Building a house in Southeastern and Washington is 8% above the national average.

More Expensive Places To Build in Pennsylvania:

If anything between 10% and 15% is considered more expensive, then there are three such cities in state of Pennsylvania. Building costs in Philadelphia, Valley Forge and Warminster are 11% above the national average.

Very Expensive Places To Build in Pennsylvania:

The most expensive places to build a house are those which are 15% above the national average. There are no such places in the state of Pennsylvania.

Pennsylvania State Average Costs:

Private home building costs in the state of Pennsylvania are -1% below the national average. Building costs in Lancaster, Wilkes Barre and York are equal to the State Average. Building cost rates in Scranton are closer to the Pennsylvania state average by a deviation of 1%. Pennsylvania is one of the cheapest states to build a home in the United States.


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