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Posted by Stephanie on May 6, 2024

From manufacturing to retail, many industries rely on warehouses to store and produce goods. These facilities allow companies to handle inventory management, storage, and distribution. Because of how large these buildings are, the costs associated with constructing one can be high. Before you begin this type of project, you must learn about the various construction costs you’ll be required to pay. 

When creating a budget for your warehouse construction project, account for the numerous factors determining the cost. Everything from the materials you use to the design and layout of the facility dictates the project’s cost. The following guide answers, “How much does it cost to build a warehouse?”

distribution center

Factors Affecting Warehouse Construction Costs

Numerous factors affect warehouse construction costs. You must account for each type of expense to ensure your project runs within budget. The primary factors you need to be on the lookout for include the following:

  • Location
  • Project Size
  • Site Preparation
  • Permits and Fees
  • Type of Warehouse Construction
  • Building Materials
  • Intended Use
  • Utilities
  • Interior Finishes

Location

The location of the building can significantly influence its final cost. The costs of buying land can vary greatly by city, state, and region. For example, building a warehouse in Southern California will likely be more expensive than constructing the same building in rural Arkansas

Based on national averages, the warehouse costs range from $20-$60 per square foot. However, the prices for constructing warehouses in major urban destinations can be much higher. For example, you could pay more than $200 per square foot when developing a warehouse in NYC or Seattle. 

Project Size

The project size also directly impacts the costs. A warehouse with a floor plan extending for 20,000 square feet will often cost more than one measured at 10,000 square feet. More significant buildings invariably require additional labor, materials, and time, increasing the price

If you’re building a warehouse measuring 10,000 square feet, your costs can range from $125,000 to $200,000. If your warehouse is around 50,000 square feet, you may need to pay as much as $1 million. Major companies like Amazon and Walmart have over 100,000 square feet of warehouses. At this point, costs scale slowly. A 100,000-square-foot warehouse might cost $6 million.

Site Preparation

The site needs to be prepared before the warehouse can be built. This process includes everything from grading and excavating the land to installing utilities. The costs associated with these tasks depend on the work’s complexity and the land’s size. 

Permits and Fees

Your warehouse construction project can only begin once you obtain the necessary permits. Because these projects can be expansive, you’ll likely need building, environmental, and zoning permits. The fees you’ll need to pay for these permits depend on the size and location of your warehouse. Remember that you might be required to wait weeks or months to receive a building permit. 

The local planning department will review your application. If they have an issue with your building plans or some of the details in your project specifications, the planning department may require you to make changes before they approve the permit. Any delays during the permit application process can impact the timeline of your warehouse construction project.

Type of Warehouse Construction

When building a warehouse, you can use several construction methods, each with its advantages and disadvantages. The method you use to construct the building can substantially impact the cost. The main techniques at your disposal include pre-engineered metal building, masonry, and concrete tilt-up construction.

The pre-engineered metal building (PEMB) construction technique involves using components already made. When using PEMB for your warehouse, the components must be bolted on-site to create the final structure. 

Compared to masonry and concrete tilt-up, this strategy is usually more affordable and quicker, so you can have your warehouse up and running without a lengthy delay. However, some things could be improved regarding design flexibility. These structures are made with pre-set specifications, so expanding the warehouse is only feasible if your company grows. 

Warehouse with Steel Shelving, Bins, and Pallet Rackiing

PEMB warehouses can also have poor breathability. The steel used to construct these buildings is a non-porous material, so air can’t pass through easily. In this scenario, issues like mold growth, rust, and excess condensation are more likely to occur

These buildings also have high thermal conductivity. Since steel can transfer heat quickly, it can be challenging to maintain comfortable temperatures for the facility’s personnel. You can mitigate this problem using spray foam insulation between the outside air and the steel. The average build cost for the PEMB method is around $20-$35 per square foot.

Tilt-up construction involves pouring concrete onto a surface before tilting it upwards to create the warehouse’s walls. This technique is affordable and quick, but it’s not great for more giant warehouses or facilities with complex designs. 

While tilt-up construction is more affordable than masonry, it’s also more labor-intensive, which may create issues with the project timeline. You need considerable space to use the tilt-up concrete, which is only possible in some urban locations. Remember that tilt-up concrete is less durable than masonry or steel. If you use this construction method, you may need to perform maintenance more often. The tilt-up build method costs around $40-$55 per square foot.

warehouse supply planning

The masonry technique uses steel beams and columns to create the frame of your warehouse. This frame is filled with masonry and concrete for the roof and walls. This technique can be used to build large warehouses. However, it’s expensive and labor-intensive. 

These materials are also heavy, and brick and stone have high costs. Transporting them to a construction site requires heavy-duty vehicles. Ensure you implement on-site safety measures to ensure your personnel aren’t injured. Using masonry to build your warehouse, you can pay around $45-$60 per square foot.

Building Materials

The materials you use for your warehouse significantly determine the project’s cost. This impacts your initial investment and ongoing maintenance requirements. While steel was once among the most expensive materials, the cost of lumber rose rapidly during the COVID-19 pandemic. Today, steel is affordable. It also offers excellent durability and energy efficiency

When selecting a material for your facility’s roof, the costs can fluctuate considerably. Here’s an idea of the price you’ll need to pay for different roofing materials:

  • Metallic roof: $10-$22 per square foot
  • Concrete roof: $3-$6 per square foot
  • Asphalt shingles: $4-$6 per square foot

If you build your warehouse with steel, you’ll benefit from using a long-lasting and durable material. You could also opt for insulated concrete, which lasts even longer than steel while providing energy-efficient insulation.

Intended Use

Warehouses can have different purposes, which may impact their costs. For example, warehouses that store non-perishable items have different needs than ones that require temperature control. Depending on what your warehouse will be used for, you may require a more complex layout, extra electrical systems, and other materials that might change the overall cost. 

If you need to install a temperature-control system, you’ll pay ongoing costs to ensure it remains well-maintained. Once you determine what your warehouse will be used for, you can more accurately estimate your upfront and long-term expenses.

Roller Conveyors

Utilities

Regardless of how your warehouse will be used, you must pay for utilities like electricity, sewage, and water. The amount you spend on these utilities depends on where your warehouse is located and the nearby availability of the services you require. The average cost for all utilities in a warehouse is around $2.10 per square foot.

Interior Finishes

While a large percentage of the construction costs for a warehouse involve the materials you buy, you’ll also be tasked with spending a large sum on interior finishes. These finishes include flooring, insulation, and lighting. Most warehouses are built with concrete flooring. However, other materials are available if you design a more complex warehouse. You can manage your long-term costs by obtaining energy-efficient lighting. 

Conclusion

Building a warehouse is a significant investment that requires many important considerations. Before the construction process can start, you need to choose the location of the warehouse, the materials you’ll use, permit fees, the construction method, and interior finishes. Budgeting before buying materials or selecting a construction method is highly recommended.

Understanding the different components that factor into the costs of building a warehouse allows you to avoid spending too much money or being surprised by how much you spend. While this type of project is expensive, it may be what you need to grow your business and expand your offerings.

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