Apartments and multi-family residential buildings are good investments for many people. According to the Census, the number of people living in apartments has grown, with more than ⅓ of all households now living in apartments. For this reason, many builders and investors are considering building new apartment buildings.
The term apartment can be applied in many different ways, from a small owner-occupied stick-built building to a major high-rise with 30 stories and 20 units per floor.
This means that the cost to build an apartment building has an enormous range. The national average cost to build an apartment building is between $4.7 and $52 million, with most people paying around $11 million for a 5-story mid-rise apartment building with a total of 50 units. This project’s low cost is $940,000 for a duplex apartment building using basic materials. The high cost is $104 million for a luxury high-rise apartment building with 100 units.
|Apartment Building Prices|
|National average cost||$11 million|
|Average range||$4.7-$52 million|
During the pandemic, several factors drove the cost of construction and construction materials much higher. With more people at home, DIY projects and home-based projects surged, leading to shortages in lumber and other building materials. These material shortages were coupled with a shortage in the workforce and supply chains for many materials and goods when demand was skyrocketing.
This translated into an across-the-board increase in construction costs of more than 4%, with predictions saying the cost of construction can rise a further 4% to 7% in 2022. Many of the materials used in the construction of apartment buildings, including concrete, flat glass, and steel products, are affected by volatile prices, with steel seeing a more than 123% increase in costs in the past year. While this could lead to changes in materials and types of apartment buildings being constructed, the housing market is predicted to stay strong in 2022 with a continued housing shortage. This could lead to an uptick in apartment building construction to meet demand. In light of this and the market volatility, builders may want to lock in purchases and prices for future buildings before they increase again.
When building an apartment building, multiple cost factors come together to form the final total. One of these is the construction cost, which is usually calculated per square foot. This cost does not include the finishing, architect or contractor fees, land purchase, landscaping, parking lots, and many of the interior and “soft” costs like designing, material selection, and delivery.
Apartment construction costs per square foot vary both by location and structure type. Small apartment buildings with five or fewer units have lower construction costs per foot than mid-rise buildings, which have lower costs per square foot than high-rise apartments.
There is some overlap and variation, depending on whether this is a luxury, mid-range, or builder-grade apartment building. The total price range per square foot to build an apartment building is between $90 and $430 a square foot, with an average price of $270 a square foot.
The type of apartment building you construct has an impact on the total costs, mostly on the cost per square foot for construction. Larger buildings use different building methods that increase costs.
Apartment buildings come in many different shapes and sizes, which also impacts costs. The more corners and different shapes a building has, the higher the construction prices. The number of units and overall size of the building also plays a role. Below are some of the most common types of apartment buildings and their average cost per square foot.
|Apartment Building Type||Average Construction Cost per Sq.Ft. (Labor Included)|
|Infill||$90 - $190|
|Low-Rise||$156 - $240|
|Mid-Rise||$185 - $270|
|High-Rise||$235 - $450+|
The price of an infill apartment building is $90 to $190 a sq.ft. An infill apartment building is a general term for stick-built apartment homes, including duplexes, triplexes, “six-packs,” or walk-up apartments. These apartment buildings typically resemble single-family homes in architecture and style and are timber-built. They can have up to 6 apartments in one building, although the average is 2 - 4.
The cost to build a low-rise apartment building averages $156 to $240 a sq.ft., depending on the material. A low-rise apartment building usually has 4 or fewer stories and is usually made of wood construction. It is sometimes called a 3-over-1 style building. It can have 5 - 50 units and usually has elevators as well as two stairwells and a double-sided corridor.
The cost to build a mid-rise apartment building averages $185 to $270 a sq.ft. Mid-rise apartment buildings are larger and usually made of wood on concrete or with a steel podium. They can be up to 12 stories, but most are 10 or under. They have 50 to 200 units, with double-sided corridors, elevators, and multiple egresses. It is not uncommon for these apartment complexes to have an apartment gym, concierge, and other amenities. They may also have mixed uses, with retail stores on the lower level.
The price to build a high-rise apartment building ranges from $235 to $450+ a sq.ft. High-rise apartment buildings are subject to zoning laws, which dictate exactly how high they can be. They have a tower footprint 1 and are built of concrete and steel. They are always over 12 stories, and many are 20, 30, or 40 stories high. They can have 4 - 20 units per floor, usually a mix of different sizes of studios, one bedrooms, and two bedrooms. They often have gyms, pools, concierge, and other amenities in the building. Due to their height, it is important for high-rise buildings to be designed to resist the lateral forces inflicted by strong winds and potential earthquakes. Roughly every 10 stories increases the cost to build.
Apartment buildings typically become more expensive to build the larger they get. This is partly because the number of units that fit per story increases with the building size, but the materials also change. So there is no one per-story price or range, but rather different costs per square foot and total ranges based on the approximate size of the finished building. Below is a general idea of costs based on the number of stories. These numbers are an approximate average range, and the actual figures vary depending on multiple factors:
|Number of Stories||Cost per Square Foot||Total Costs|
|3-Story||$90 - $240||$3.2 - $3.6 million|
|4-Story||$156 - $240||$4.7 - $5.9 million|
|5-Story||$180 - $270||$7.3 - $13.4 million|
|6-Story||$180 - $270||$8.8 - $15.5 million|
|10-Story||$180 - $270||$10.9 - $17.6 million|
|15-Story||$235 - $450+||$20.8 - $37.5 million|
|20-Story||$235 - $450+||$26 - $53.5 million|
|30-Story||$235 - $450+||$36.5 - $80 million|
|40-Story||$235 - $450+||$52 - $160.5 million|
|50-Story||$235 - $450+||$78 - $267.5 million|
3-story apartment buildings are most likely wood, with a brick or stone veneer 2, so their building costs are generally lower. Assuming 2 - 4 units per floor, this would cost $3.2 to $3.6 million to complete. 3-story apartment buildings are common in larger apartment complexes. Rather than a single building, you may build three, four, or more smaller buildings in one large complex. This can be an attractive area for families or senior living.
Assuming 4 units per floor, a 4-story apartment building would have a cost of between $4.7 and $5.9 million to complete. 4-story buildings are likely to be partially wood with a brick or stone veneer, if not entirely made of wood. Costs begin to climb for the extra structural support needed. 4-story buildings may also be constructed in multiples within a single complex.
The cost to build a 5-story apartment building ranges from $7.3 to $13.4 million. 5-story buildings have a higher cost range than 4 stories, with added units, materials, and construction fees. They also typically have more units per floor at this height, with buildings sometimes achieving as many as 200 for very sprawling complexes. Rather than using multiple smaller buildings per complex like with 3 and 4-story buildings, a 5-story building may be one much larger building, fitting in the same number of units in less space.
The cost to build a 6-story building is $8.8 to $15.5 million. 6-story buildings also fall into the same cost category as 5-story buildings, with added units and construction costs. They are also used in the same way as 5-story buildings. They can be used as a large complex to hold hundreds of units in less space than complexes that use many smaller buildings to achieve the same occupancy.
The cost to build a 10-story apartment building ranges from $10.9 to $17.6 million. At this point, your structural needs begin to change. This is still considered a mid-rise structure, but you need to start incorporating steel for added support. You also have more units and potentially more units per floor. These buildings are not tall enough to be subject to zoning laws, so this is a common size for mid-rise structures in populated areas.
The cost to build a 15-story building ranges from $20.8 to $37.5 million. At 15 stories, you are subject to zoning laws, as well as different materials and potential construction types. Because of this, you also have more professionals adding their costs. You are more likely to see this building in urban areas rather than suburban because of zoning. You can find this building size also zoned for some up-and-coming areas near busy cities.
The cost to build a 20-story apartment building averages $26 to $53.5 million. 20-story buildings have the same cost per square foot as 15 stories and use the same structural materials. Because they are larger, they have higher overall fees. They also have the same zoning issues, so you are more likely to get approval for a building this size in an urban area. Buildings need additional structural support as they get taller and additional materials per story. This translates into higher costs.
The price of a 30-story apartment building is $36.5 to $80 million. The same price per square foot of 15 and 20-story buildings applies to 30-story buildings. Zoning, structural considerations, and other issues unique to urban building also impact costs. The larger number of units and extra materials and labor add to the cost. Locations that can support buildings of this size become more limited, meaning you may have logistical costs tied to the location and how you bring in materials and equipment.
The price to build a 40-story apartment building averages $52 to $160.5 million. 40-story buildings have the same price per square foot as 15, 20, and 30-story structures. They use the same materials but have more units, material needs, and labor needs. Like other large buildings, you most likely need to build in an urban area because of zoning. This adds costs for the higher labor rates in urban areas and the logistics of material and equipment delivery.
The price to build a 50-story building averages $78 to $267.5 million. At this size, most residential buildings fall into the luxury status, which adds even more costs to the building. The price per square foot and the unit and labor costs overlap with the costs of 15, 20, and 30-story buildings, but finishing costs are at a higher rate, bumping some of the costs to $400 a square foot or higher. As with other large buildings, expect higher costs for zoning and the logistics of building in an urban environment.
Apartment buildings can have a wide range of units, which vary in size and scale. It is common for one building to have a mixture of studio, one-bedroom, and two-bedroom apartments of different sizes. Therefore, the number of units can often be a poor measurement of the total price of an apartment building. A large building can have fewer luxury apartments that are all two bedrooms and cost a lot more than a much smaller building with the same number of units that are a mix of studio and one-bedroom units that are mid-range in finish. Therefore, the cost range per number of units in a building can be enormous.
Below is the average range for apartment buildings by unit. This is a very broad range, so you need more parameters to narrow this down.
|Number of Units||Average Cost Range (Labor Included)|
|4-Unit||$1.1 - $3.7 million|
|6-Unit||$3.2 - $15.5 million|
|8-Unit||$3.2 - $16.6 million|
|12-Unit||$3.2 - $17.6 million|
|16-Unit||$3.2 - $19.3 million|
|20-Unit||$3.2 - $21.4 million|
|24-Unit||$3.2 - $26.8 million|
|50-Unit||$7.3 - $53.5 million|
|100-Unit||$20.8 - $160.5 million|
A 4-unit apartment building costs between $1.1 and $3.7 million. A 4-unit building could have 1 - 4 stories, depending on how it is laid out. Buildings of this size can be built as a single unit. They can also be built in multiples within one larger apartment complex. This is common for apartment complexes designed for seniors and families.
The price of a 6-unit apartment building averages $3.2 to $15.5 million. A 6-unit building typically has at least 3 floors but could have more, depending on the apartment sizes and how luxurious the building is. Buildings of this size can also be built as stand-alone apartment buildings or included in larger complexes. This is a common building size for many smaller complexes that may have the apartments somewhat spread out.
The price to build an 8-unit apartment building is between $3.2 and $16.6 million. An apartment building of this size could have between 3 and 6 stories. At this size, it’s common to start mixing various sizes of apartments on each floor. This is another building size that may be included in complexes with multiple buildings. In areas with high occupation and housing needs, larger units per building can increase the number of tenants over the property.
A 12-unit building could have 3 to 6 stories and has a price range of between $3.2 and $17.6 million, depending on the scope, scale, and materials. Buildings of this size usually have a good mix of unit sizes. It is common with these to include studio units mixed with single and two-bedroom units.
A 16-unit apartment building will cost between $3.2 and $19.3 million. Units of this size may have between 4 and 10 stories. They will also usually have a wide mix of apartment sizes, and potentially some luxury units. Depending on how many floors the buildings have, you may have some 16-unit buildings inside of a larger complex that includes buildings of other sizes and occupancies.
20-unit buildings are 4 to 10 stories on average, making their average price range between $3.2 and $21.4 million. Like 16-unit buildings, it is common for buildings of this size to have a mix of apartment sizes. You might also want to add one or more luxury units. It is also common in buildings of this size to start including more amenities, such as communal lobbies and other spaces.
A building that houses this many units could be anywhere from 4 to 10 stories, giving it a cost range of $3.2 to $26.8 million on average. 24-unit apartment buildings have a wider range of apartment sizes. Some buildings may even start to have 3 or 4-bedroom units on the top floors. Amenities become more common, with some buildings of this size having game rooms or gyms.
50-unit apartment buildings have costs ranging from $7.3 to $53.5 million. At 50 units, you are officially in a mid-rise apartment building, so your costs increase. If this is a luxury building, it could be more than 12 stories, making it a high-rise. At this point, you definitely have more costs tied to the building’s structure. You should also have amenities in the building, which can start to impact total costs.
The price for a 100-unit apartment building is between $20.8 and $160.5 million. A 100-unit building can be many different sizes from a mid-rise of 5 floors to a luxury high-rise apartment complex. Most of your costs vary depending on the building height, luxuries, and amenities. High-rise apartments have higher costs, and amenities like pools, gyms, and lounges are more common for a building with 100 units.
Given the popularity of high-rise apartment complexes in urban areas, many construction firms turn to modular or prefab building design to cut costs. This can be a much less expensive method of building, lowering the construction cost per square foot and reducing many of the additional “soft” costs like designer fees. Expect the average price per square foot for a prefab apartment building to start at about $130 to $150 a square foot. This also applies to high-rise buildings, making them much more affordable.
Prefab building or modular construction means many parts of the building are constructed off-site. The various components are transported to the building site to be assembled. Because most of the construction happens in a controlled environment, there are fewer delays for weather. In addition, computer-aided building technology makes construction much faster and more streamlined. This helps keep costs down while allowing your building to go up quickly.
Many variables determine the overall cost of an apartment building, including materials and labor and the cost of an architect, general contractor or builder, and structural engineer. Costs vary by location, material types, and building style. High rises require more material in total and for the structure, so you have higher total material costs.
Every project is different, but you can get a general idea of how a large-scale project like an apartment building breaks down in costs. This includes the labor and materials for each section as a percentage of the total project cost. Architect, designer, and builder fees are in addition to the total cost to build.
|Project Area||Average Cost Percentage|
|Architect Fees||8.9% - 10% of the total cost (added)|
|Structural Engineer Fees||$500 - $20,000 as needed (added)|
|Contractor or Builder Cost||25% of the total cost (added)|
|Walls (Wood) and Exterior Finish||6% - 10%|
|Roof and Cover||10%|
|Windows and Doors||5%|
|Interior Finish||6% - 10%|
|Floor Finish||3% - 5%|
|Interior Features||3% - 5%|
|Masonry Walls (If Used in Place of Wood)||9% - 12%|
Numerous factors influence the final cost of constructing an apartment building. These include the unit sizes, number of units, overall structure size, materials used, availability of labor and materials, and many additional factors.
Location is one of those additional factors. Cities and urban areas typically have higher construction costs than other areas, influencing the total cost per square foot. In addition, the layout or floor plan of the building also impacts the project cost. The more elaborate the floor plan, the higher the costs.
Some apartments have mixed uses. They may include offices or storefronts, and many also offer areas like pools, gyms, social areas, and lobbies. The more amenities a building has, the higher the overall construction costs. For these reasons, the only way to get a true project cost would be to contact a builder or architect specializing in this work.
There is a wide range of associated maintenance costs for apartment complexes. The materials used, number of units, and unit type all play a role in how much maintenance costs.
Monthly maintenance fees range from $50 to $1,000 a month for each building, and many have varying monthly costs, depending on the needs of the building at that time. This can also vary by location and the type of tenants you have. Urban areas and luxury buildings may have different maintenance needs than apartments in other areas.
There is also a wide range of costs associated with owning an apartment complex. The building size, number of occupants, building conditions at the time of the sale, building materials, and location all play a role in the ownership cost.
Also, owning an apartment complex is considered a source of income. Meaning that rather than paying out each month, you take in money that is over and above your operating expenses and the price to purchase the building, assuming a competitive loan rate. The price of owning the complex should be between about 20% and 50% of the money brought in by the complex.
When building or purchasing an apartment or rental property as an investment, consider the investment costs of a single-family versus a multi-family residence. With a single-family investment, you purchase a house that you rent to others. If the tenants leave and you have difficulty rerenting it, you will not see a return on your investment during that time, but you still have the maintenance and ownership costs.
With a multi-family investment, you have multiple renters, so if a unit is vacant or a tenant is late with their rent, you take in enough income to cover the property expenses.
Single-family investments usually involve less money upfront but are also less likely to be easily financed. Multi-family investments cost more upfront, but because of the multiple income streams, most banks front the costs more readily.
A luxury apartment is a high-end apartment that includes everything one could ever want or need. They are large and spacious and located in great locations. They have first-class appliances and equipment, a concierge, on-site parking, and numerous amenities, like movie theaters, fitness centers, or spas. The price to build a luxury apartment starts at around $450 a square foot and goes up, rather than the average of $270 a square foot.
Most apartment buildings will have above ground parking, with lot sizes that allow for a minimum of one car per unit. Some may have lots that allow two or more cars per unit. Costs per space are between $24,000 and $25,000 for most parking garages, while surface lot costs can be lower at $3 to $7 a square foot.
This has a wide range of factors that influence it, including the size, location, age, and condition. It could be anywhere from $3 to $200 million.
In most cases, yes, having multiple income streams can produce a very high return on investment.
As long as they are kept in good condition, they hold and increase in value.
This is mostly due to market demand. The more renters in a market, the higher the cost, while the fewer renters, the lower the cost.
Average costs to build a single apartment unit start at around $68,000. Studio apartments may cost less depending on size and location - some very small studio apartments may be built for less, but luxury studios may cost more.
This will vary tremendously based on the size of the complex, and the size of the units. It’s not uncommon for a complex to have a mix of differently sized apartments. A small complex may have 10 apartments, while a large complex could have 100 or more apartments spread throughout multiple buildings.