This post originally appeared on Orphan Road.
One issue that comes up frequently when discussing “towers” compared to shorter buildings is cost. Yes, taller buildings cost more. But not much more. And what you spend on construction can come back in saved real estate costs (since you can build more units with the same land).
Here’s some typical cost data from the 2011 RS Means*:
Apartments, Low Rise 1-4 story, $84/sf, $95,000 per unit
Apartments, Mid Rise 5-7 story, $107/sf, $118,000 per unit
Apartments, High Rise 8-24 story, $116/sf, $115,000 per unit
Don’t get too excited that the High Rise unit is actually cheaper than the Mid Rise, it’s clearly a smaller unit. The per sf number is more important. But either way, that’s a very small difference in price. And let’s compare that low rise number. It sure sounds cheap, but let’s run some numbers. Let’s compare 3 buildings: a 4 story, a 7 story, and a 24 story, each on the same piece of land – let’s say a 15,000sf piece of land (around 3 SF homes) that cost $4M to buy and clear. Let’s assume each unit is 1200sf.
4 story: $4M land cost, $5M construction cost, 50 units = $181,000 per unit.
7 story: $4M land cost, $11.2M construction cost, 87 units = $175,000 per unit.
24 story: $4M land cost, $41.8M construction cost, 300 units = $153,000 per unit.
Even at a higher per sf construction cost, the tall building wins.
*”The cost figures… were derived from aproximately 11,200 projects… they include the contractor’s overhead and profit, but do not generally include architectural fees or land costs.” These are also national averages – Seattle has a location factor of 105, so 5% should be added to any number.