What DOES go into "cost per square foot"?

What DOES go into "cost per square foot"?

You want a cut-and-dried answer. Three architects show there isn’t always a cut-and-dried answer. But the more you know about that sometimes arbitrary number, the smarter you’ll be in planning, negotiating and building your best new veterinary hospital.
 
Mar 29, 2016
By dvm360.com staff

It’s easy to see why a Mercedes sedan costs more than a Kia.

Veterinary architect Dan Chapel, AIA, NCARB, of Chapel Associates Architects in Little Rock, Ark., wishes the same were true for the differences between cheaply made and well-made veterinary hospitals.

Dan Chapel, AIA, NCARB“But clients often get fixated on the cost per square foot number,” Chapel says. “I tell people at the Hospital Design Conference every year at CVC Kansas City to make sure when they talk to a contractor or an architect that they’re clear themselves on whether they’re looking for a Kia, a Mercedes or something in between.”

Chapel says the clearest view of the cost per square foot of a veterinary hospital is captured in the current contest entry form. Here’s how it breaks down:

OFFICIAL HOSPITAL DESIGN COMPETITION FORMULA

Cost of building(s) (include costs for building and cabinets only; exclude land purchase, landscaping, parking lot, etc.)
÷
Total square footage of plan
=
Cost per square foot

BUDGET FOR THESE EXPENSES, BUT DON’T INCLUDE

• Site improvement
(include parking lot, landscaping, signage, utilities, etc.)

• Land
(include fair-market value if land isn’t recently purchased)

• Professional fees
(include architect, surveyor, attorney, accountant, lender, etc.)

• Equipment
(include animal housing units, medical and lab equipment, exam and surgery tables, phones, etc.)

• Furnishings
(chairs, artwork, desks, retail displays, etc.)

• Computers
(include depreciated items from previous facility)

• Additional fees
(permits, city fees, impact fees, etc.)

But get into the details with other experienced architects, and you have some nuanced views on this.

Don’t count the extras …

Architect Wayne Usiak, AIA, NCARB, of BDA Architecture in Albuquerque, New Mexico—another long-time speaker at the Hospital Design Conference—says equipment costs can be tricky with contractors, who can be inconsistent with what they include.

Wayne Usiak, AIA, NCARB“We as architects don’t care about the big-ticket medical stuff—radiology equipment, surgery equipment, underwater treadmills, CT scanners and MRI machines—because it’s rarely a part of the building financing,” says Usiak. “But in many cases equipment that’s built in is included: cages, runs, tubs, tables, sinks, central vacuum, etc.

“I always want to eliminate all medical equipment costs from the cost-per-square-foot calculation,” Usiak says.

Want a number? Usiak sees $225 to $350 per square foot nationally for new freestanding veterinary practices. But it all depends on location, practice type, municipal requirements and any embellishments requested by the hospital owner or required by rules.

“Some of these costs you can control and some you can't,” Usiak says. “Can you build for less? Sure. You just won't want to own that building very long.”

Don’t ignore the extras …

Another Hospital Design Conference speaker—Heather Lewis, AIA, NCRB, of Animal Arts in Boulder, Colorado—lays it out fast: Cost per square foot includes the hard cost of the project, which includes the building cost, the land improvement cost and everything that is fixed within the building (you know, built-in runs, etc.).

Heather Lewis, AIA, NCARBLewis says land purchase costs, loose equipment costs, and permitting and professional fees, financing fees and contingencies don’t figure in that number. But, for goodness sake, don’t ignore them.

“They are costs,” Lewis says. “We find that these costs, not including land purchase, run about 35 to 38 percent of the hard project costs.”

Be realistic

If it sounds too good to be true, it probably is. Chapel says many optimistic veterinary practice owners suffer from a little false hope when it comes to that magical cost-per-square-foot number. He’s heard veterinary practice owners tell him, “I talked to three builders and their estimates ranged from $195 to $225 per square foot, but I’m convinced it will cost $150 per square foot.”

If you keep hearing a more expensive amount per square foot from several sources, don’t hold out hope. Keep in mind that most competent builders should be fairly close in price. As important as cost per square foot can be in early planning to consider how much hospital you can build in a particular area with your particular needs and wants, it’s not the be-all-and-end-all. Building the veterinary hospital of your dreams is a whole more complicated—and wonderful—than that.

What about a commercial

What about a commercial condominium? (I.e. A purchased leasehold-type space). According to your definitions this would qualify as "land purchase" but clearly includes more inherent structural components. At the same time the build out costs are identical to that of a leasehold. So, leave out condo purchase price in $/sq ft or include?
A related question would be, shouldn't there be 2 different standards for a leasehold/condo build-out vs. a free-standing building? Thanks!