Minneapolis Construction and Project Cost Update Report

Check out JLL's Minneapolis Construction and Project Cost Update report to get the latest information on trending and forecasted construction costs.

Building cost index

  • Since Q4 2018, the National Construction Cost Index growth rate has been deescalating.
  • Year-over-year construction cost growth peaked at nearly 4 percent in October 2018.
  • In the second half of 2019, year-over-year construction cost growth rates have been hovering around 1 percent.
  • Since 2010, the national year-over-year construction cost growth rate has averaged 2.6 percent.

Q3 2019 Material price changes

Individual commodity cost changes year-over-year:


Countries by share of total U.S. imports

2018 Steel Imports, % share of U.S. total
Canada 18.3%
European Union 14.1%
Brazil 13.0%
Mexico 11.0%
Korea 8.6%
Russia 7.5%
Japan 4.7%
Turkey 4.6%
Taiwan 3.2%
Vietnam 3.2%
China 2.1%
2018 Aluminum Imports, % share of U.S. total
Canada 37.6%
United Arab Emirates 10.1%
Australia 5.8%
European Union 5.0%
India 4.7%
Bahrain 3.6%
Argentina 3.5%
Mexico 3.4%
Russia 3.3%
Qatar 3.3%
China 3.2%

Architectural Billings Index

  • The Architectural Billings Index (ABI) from the American Institute of Architects is a leading economic indicator of construction activity in the U.S. and reflects a 9 to 12 month lead time between architecture billings and construction spending.
  • Midwest architectural billings have been declining almost every month since the start of 2019.
  • An ABI score below 50 represents contraction in billings from the previous month, indicating a decrease in demand for commercial real estate design services. The Midwest ABI was exactly 50.0 in April 2019, has since dropped to the upper 40s, and currently sits at 45.3.
  • The National ABI is trending similarly and has been scoring below 50 since Q2 2019.

Construction costs

Construction costs in Minneapolis are up 10.5% over the past five years, slightly trailing the national construction cost growth rate.

Construction costs in Minneapolis were 106.2% of the national average in 2019, continuing the pace seen in recent years.

New development costs

Why new office supply is tempered New office construction in the market has been limited by increasing construction costs: a new Class A multi-tenant office tower is estimated to cost $400 per square foot.

At a required return of 8.50 percent, net rents must average at least $28 per square foot* to justify speculative new construction.

$28 net + $18 op ex = $46 gross rent, which would be an all-time Minneapolis high water mark over 15 percent above the current high end of the Class A market.

*$28 net rent is calculated using $34 net rent resulting from 8.50 percent return on cost of $400 PSF reduced by 18 percent for NOI derived from parking and other miscellaneous income.

Construction Cost Components PSF
Land $30
Hard Costs $240
Tenant Improvements $70
Self Costs $30
Leasing Commissions $15
Financing Costs $15
TOTAL $400

Fit out total project costs

JLL provides national benchmarking of office fit out costs on an annual basis. These costs are based on national averages adjusted to local markets with an index multiplier. In order to provide a more precise analysis of local market pricing, we made adjustments to the national benchmarking to best reflect local market conditions and typical project deliveries.

2019 Office Fit Out Costs

Space Quality and Complexity

These costs are “Total Project Costs” and are inclusive of:

  • Construction costs – Hard Costs
  • Design, engineering and fees – Soft Costs
  • Fixtures, furniture and equipment – FF&E
  • Technology (A/V, security, IT), branding and moving - Tenant Factors


Designed on a low-cost and simple budget, with finishes focused on function over quality. Space contains basic technology and aesthetic design.


Increased project complexity, taking into account upgraded lighting, cabling and some structural changes. Average-quality materials and details.


Complex project design with emphasis placed on top-quality finishes and space improvements. Increased effort spent on aesthetics and detail design.


Open office floorplan with 100% bench-style space and no enclosed offices. Design also includes numerous varieties of both collaboration and conference spaces.

$111 PSF $120 PSF $130 PSF

Office Styles


Agile floorplan with 10% enclosed offices and 90% open floorplan with 6' by 6' work spaces, with minimal benching for visitors. Design also includes a strong mix of conference rooms and two to four dedicated collaboration spaces.

$116 PSF $125 PSF $130 PSF


Private office–heavy floorplan with 30% enclosed offices and 70% open floorplan with large 8' by 8' workspaces and no bench space. Design also includes several conference rooms and one collaboration space.

$135 PSF $148 PSF $180 PSF

What makes Minneapolis-St. Paul different?

Projects in Minneapolis-St. Paul cost less than in many major markets (NYC, CHI, SF) but are more expensive than in many similar-sized markets (DET, DEN, PHX). There are a variety of factors that contribute to where the Minneapolis-St. Paul market falls on the spectrum of national project costs.

Factors pushing costs lower

  • Collaborative environment leads to project teams delivering more efficiently.
  • Modest Midwestern design aesthetic keeps finish levels moderate.
  • Clients focus on hiring the right team, reducing the need for excessive engagement of technical consultants.

Factors pushing costs higher

  • Labor availability does not meet demand meaning premium pricing for all trades and longer project durations.
  • Skilled labor force is mostly unionbased.
  • Local and state sales taxes are in the top one third of all markets nationally.

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