How Much Does It Cost to Build an Apartment Complex?

By Kevin Brouillard · August 28, 2023 · 8 minute read

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How Much Does It Cost to Build an Apartment Complex?

As with any construction project, the cost to build apartment complexes differs, based on many factors. The national average is around $12.5 million, but the range varies considerably based on the square footage, number of units, and type of apartment complex.

For anyone considering building apartments, it can be helpful to know what influences the cost early in the process.

Key Points

•   Building an apartment complex costs around $12.5 million on average, but this can vary significantly.

•   Costs per square foot for apartment construction range from $95 to $645.

•   The number of units can affect the overall cost, with each unit costing between $70,000 and $200,000.

•   Different types of apartment complexes, such as infill, low-rise, mid-rise, and high-rise, have varying costs.

•   Prefab or modular construction offers potential savings, with costs ranging from $150 to $400 per square foot.

What Determines the Cost of Building Apartments?

So, how much does it cost to build an apartment complex? Some design choices, like the number of stories, will increase the cost more than others. Here’s what you need to know about different cost factors to calculate the project budget and other things to consider if you’re thinking of building a house or apartment.

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Where you plan to build an apartment complex will impact the cost. Land prices vary across the U.S., with New Jersey ranking among the most expensive at $242,900 for one acre on average. On the lower end, Wyoming is the most affordable with an average cost per acre of $54,000.

Square Footage

The cost to build a townhouse is impacted by the size, which is measured in square feet. Generally speaking, the larger the size, the higher the cost. How much it costs to build apartments is subject to many cost factors, but the price range for an apartment complex falls between $95 and $645 per square foot. The average price comes in at around $398 a square foot.

Number of Units

The number of units in an apartment complex is another way to assess construction cost. The cost of a single unit spans from $70,000 to $200,000.

This wide cost range is due to other apartment characteristics, such as the square footage, finishings, and materials used. Whether you plan to design units as a condo or apartment may impact the type of amenities offered and overall design, which impacts the cost per unit.

Replicating the same floor plan across apartments is one strategy to reduce the total cost per unit.

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There are different types of apartment complexes, including infill, low-rise, mid-rise, and high-rise.

•   Infill: This type of apartment is constructed on land in a neighborhood that is already largely developed, which generally limits the size of the structure to a duplex or triplex apartment. Building an infill apartment costs between $95 and $205 per square foot on average.

•   Low-rise: This generally involves apartment complexes with four or fewer stories. Low-rise apartments may be built with wood and have an average construction cost of $180 to $275 per square foot.

•   Mid-rise: This includes apartments between five and 10 stories which involve more complex design elements, such as elevators, double-sided corridors, and use of concrete and steel in construction. The average price to build a mid-rise apartment averages $210 to $310 per square foot.

•   High-rise: This type of apartment has 11 or more stories and usually requires more permitting, a driven pile foundation, and use of concrete and steel. High-rise apartments range in cost from $270 to $675 per square foot.

Whether an apartment complex includes mixed uses, such as ground floor storefronts or a basement parking garage, will affect the construction cost.

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Number of Stories

How much does it cost to build apartment complexes by story? In most cases, the taller the building, the greater the expense. Mid- and high-rise apartment buildings usually require pricier materials, such as concrete and steel. Meanwhile, low-rise apartments may be built with wood, which is comparatively less expensive. Labor costs may also increase for apartments with a higher number of stories.

Prefab Apartment Building Cost

Option for prefab or modular construction is a potential cost saving opportunity. The uniform nature of these apartments reduces design expenses, plus the materials are manufactured off-site, reducing labor costs and weather-related delays. Prefab apartment buildings run from $150 to $400 per square foot on average. This construction style can be applied across apartment types, too.

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Apartment Building Construction Cost Breakdown

There are many factors that impact the cost of building an apartment. Although every apartment complex is unique, you can get a rough estimate of the total project expenditure by breaking down the costs by category. Here’s what you can expect to pay for different elements of the project.

•   Architects: 8-10% of the total cost

•   Builder or general contractor: 25%

•   Structural engineer: 1.5%

•   Foundation: 9%

•   Floor structure: 12%

•   Flooring: 5%

•   Masonry walls: 9-10%

•   Wood walls: 6-10%

•   Roof: 10%

•   Plumbing: 12%

•   Windows and doors: 5%

•   Kitchen: 8%

•   Electrical: 10%

•   Interior features: 3-5%

•   Interior finish: 10%

“Really look at your budget and work your way backwards,” explains Brian Walsh, CFP® at SoFi, on planning for a mortgage.

Recommended: Tips for Buying a New Construction Home

Factors Affecting the Cost of Constructing an Apartment Building

There are many moving parts and cost categories that affect the construction cost of an apartment building. Besides the labor and materials expenses outlined above, it’s also important to consider soft costs and paying for building and zoning permits.

Soft costs can include fees for services like interior design, legal support, and interest and fees on a construction or home loan. When talking to lenders, it can be helpful to ask mortgage questions to identify the estimated closing costs and what fees apply. Using a mortgage calculator can help you get a sense of the financing that might be necessary for a home purchase.

Average Maintenance Cost for an Apartment Complex

A newly constructed apartment could have less maintenance costs for an initial period while equipment and building structures are in good condition. However, it’s recommended to set aside a portion of rental income each month to ensure you have sufficient funds for routine maintenance and emergency repairs.

Following the 1% rule, for example, involves budgeting one percent of the property value each year for maintenance costs. For a $2 million apartment building, this would amount to $20,000 a year for maintenance. Doing the maintenance yourself is one way to keep costs down, but this may not be feasible for larger apartment complexes.

If you plan to sell your apartments to individual owners, then maintenance could be handled through a homeowners association (HOA). As members of a HOA, apartment owners pay dues through monthly fees that support the cost of maintenance, which can vary depending on the extent of a complex’s amenities.

Recommended: How to Buy an Apartment

Cost of Owning an Apartment Complex

Besides maintenance, owning an apartment complex can involve costs associated with property taxes, amenities, insurance, and staff. If you finance the construction or work with investors, you may also need to make loan payments or divide profits between shareholders in the business.

Enhancement and Improvement Costs

Building a luxury apartment building or complex will likely entail greater enhancement and improvement costs. This may include high-end appliances, on-site parking, and dedicated outdoor space for each unit.

Luxury properties often have numerous communal amenities too, such as fitness centers, pools, and outdoor recreational areas. These upgrades bring the average cost of a luxury apartment to $550 to $650 per square foot.

A construction loan is an option to pay for the added enhancement and improvement costs. For a thorough review and tips on financing options, check out a home loan help center and compare different types of mortgages.

The Takeaway

How much does it cost to build an apartment complex? The total project cost will depend on a variety of factors, including the location, number of units, size, and design of the apartment but you can figure it is in the neighborhood of $398 per square foot. There are government-backed loans and private loan options for financing the cost to build an apartment complex.

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How much does an apartment complex cost?

The cost of an apartment complex varies considerably based on location, size, and other factors. With an average price of $398 per square foot, the estimated cost of a 10,000 square-foot apartment complex would be $3.98 million.

Do apartment buildings hold their value?

Apartment buildings that are well-maintained are likely to hold or increase their value over time.

How many units are in an apartment complex on average?

The number of units differs significantly depending on the size of the complex. Larger, high-rise buildings may have hundreds of units while an infill building built on a lot in an existing neighborhood might have only a few units.

Photo credit: iStock/AlbertPego

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