It’s not uncommon for some commercial post frame building owners to focus most of their time and attention on the planning, design and construction process of their commercial building project. Looking beyond that may seem unimportant at this point. However, taking time now to anticipate costs that can arise post-construction or during building occupancy, will give you greater control over your future finances.
Permitting & Site Preparation Costs
Permitting Costs
You’ll need to sit down and determine what type of permits you’ll need to move forward with your construction project. Permitting costs are based on the following factors:
- Building Size (square footage)
- Building Segment (Agricultural, Residential, Commercial, or Equine)
- Jurisdiction (state or county)
*Please note that the information below are averages to help with your planning. Costs may vary.
It’s important to mention that the commercial permitting process varies from state to state. Some states require commercial projects to obtain a permit through the state they’re building in. Meanwhile, others request one from the local level.
Permits for commercial buildings range from $1,000 to $100,000. A large portion of these costs is due to commercial projects requiring Mechanical Electrical Plumbing plans (MEPs), architectural drawings, civil site drawings, and the state’s stamp of approval.
If you choose a builder who has a licensed engineer on staff, your permitting costs will lean towards the lower end of the spectrum. On the other hand, if your preferred post frame builder doesn’t have a licensed engineer on staff, your permitting costs will be towards the higher end.
Site Preparation
Once you’ve obtained the correct permits, you need to consider the cost of preparing your building site. We define site preparation as the work done on your land prior to construction. This process allows you to identify and address site complications upfront before construction begins.
The following factors drive site costs:
- Location and elevation
- Type of granular fill
- Building pad size
- Amount of object removal
As a result, some projects will require more site prep than others, affecting the cost. Depending on the size of your commercial project, your site costs can range anywhere from $1,000 to $50,000.
Investing in proper site preparation will extend your building’s lifetime and reduce total project construction costs. You can further save on costs if you own the equipment and plan on doing your own excavation.
Feeling overwhelmed? We created a simple guidebook that will provide you with helpful insights into preparing your building site.
We recommend working with a post frame builder who will:
- Facilitate the ideal site layout and building location
- Help design a building that works for your site
- Consider the implication of total project costs
- Recruit an excavator and engineer
- And take the lead during the permitting process
Proper site preparation will save you time and enhance your building quality by allowing a seamless construction area for men and materials to move and work.
Unavoidable, Yet Controllable, Commercial Building Costs
Similar to a pole barn home, you will have to pay for the week-to-week, month-to-month upkeep – inside and outside, which include items such as:
- Cleaning services (if you choose to hire it done)
- Lawn services (if you choose to hire it done)
- Pest control
- Regular heating and cooling checkups
The cost of utilities is a good item to look closely at before you even start post frame construction – do certain materials offer natural insulating properties to keep costs down? Or, are there local agencies that offer tax advantages if you use environmentally-friendly materials and processes?
Depending on what type of commercial business you’ll be constructing (single-story office building, commercial real estate, professional services, pole barn municipal buildings, etc.) it might be in your best interest to package your business as “green” to take advantage of some marketing opportunities.
Property Taxes
Property taxes should also be taken into account before your plan is developed. These annual taxes will be based on the size, location and quality of your building and lot. Bills for insurance premiums will come around on a yearly basis. Fortunately, these costs can be somewhat controlled by the building decisions you make now.
For example, the size and type of post frame structure you choose to build will determine your post-completion insurance rates and operating costs. If you’re looking to stay under budget, this is something to keep in mind during the design phase of your commercial project.
Building Upkeep
Upkeep is another important issue. What will it cost to maintain the building and surrounding grounds? Every commercial building type requires maintenance, even a brand new one.
You won’t have to replace big-ticket items, such as a roof or heating system, anytime soon. However, you’ll still have to pay for the week-to-week, month-to-month upkeep, inside and out.
Cleaning services, lawn care, heating and cooling system checks, pest control visits - these and other routine expenses can quickly add up. It’s wise to budget for these expenses now so that they don’t sneak up on you later.
Keep in mind, during the building design phase, that the use of high-quality materials can keep your post frame building looking newer longer and reduce your maintenance expenses.
Estimate Your Utility Costs
It’s also a good idea to estimate your utility costs. These monthly expenses can be minimized – and your Return On Investment enhanced – with a building design that offers greater energy efficiency. For example, the type of insulation package that you select will have an impact on your heating and cooling expenses. Furthermore, the type and amount of lighting you choose will have an impact on your electricity bill.
Factors that Offset Commercial Building Costs
If you choose to finance your building, as you gradually pay down your mortgage principal over time, your equity will increase. You may also be able to write off the mortgage interest at tax time (check with your tax advisor).
Another plus: The market value of your property may rise the longer you own it. In fact, you may be looking at your new commercial building as a type of investment. Of course, the return that you achieve will depend on many variables, including the overall economy and your local real estate market.
Some people build a commercial building as an investment. All or portions of the building can be rented or leased, giving them steady cash flow and good return. Are you interested in renting or leasing your commercial building?
The amount of income you achieve per square foot or per unit depends on:
- Location
- Building use
- Economic conditions
Generally, a higher-quality building in a nice location will attract a better type of tenant, which could potentially result in higher income. In contrast, a modest building in a less attractive location may generate less income.
It’s also important to keep in mind that potential tenants will also analyze the following:
- Your building’s zoning restrictions
- Amount of usable space
- Available parking
- The term and type of lease or rental agreement
On the flip side, you will want to analyze these potential tenants. Ideally, a tenant should demonstrate financial stability and attract an appropriate clientele.
Construction Costs Breakdown
After taking the different factors into account, the rough percentage breakdown of an average commercial building project will be:
- Building Shell: 20%
- Finishing: 45%
- Concrete: 15%
- Site Prep: 15%
- Permit: 5%
Please note that the above percentages will vary based on a variety of factors. For example: in-floor heating within the concrete, special overhead doors, unique building features, and extensive site preparation. If you don’t plan to finish out your building, the interior portion of the finishing percentage will be greatly reduced.
Are You Ready to Move Forward With Your Commercial Building Project?
Commercial building expertise does not come easily or overnight. Look for a post frame builder who has the expertise and experience necessary to lead you through the entire construction process – someone who is not just a salesman or an estimator. Check references; look closely at their reputation in the building community and community at large.
Are they a stable business that will be around to finish the project? FBi has a solid reputation throughout the Midwest, is easy to work with and has the expertise to guide you through the entire construction process.
Do you have more questions that are not covered in this article? If you need help designing and planning, please contact FBi Buildings at 800.552.2981 or click here to email us. If you are ready to get a price, click here to request a quote and a member of our customer engagement team will help you determine the next steps of your project.