12.11.2025
When you ask what is the average cost per square foot for multi-family construction, you need robust data to guide your pre-construction appraisal and lending strategy. Nationally, that figure typically centers around $350 per square foot, with a range from $220 to $700 per square foot in 2025. By drilling into building type, location and project scale, you can refine your valuation and manage risk before you commit to financing.
Define cost per square foot
Cost per square foot represents the total hard and soft construction costs—materials, labor, permits, design fees and financing expenses—divided by the project’s gross building area. In a multi-family context, you must include unusable spaces (lobbies, corridors, shafts), which often account for about 15% of the floor area, when calculating gross square footage. Accurate gross measurements ensure your cost benchmarks align with the actual scope of work.
Break down building types
Different building typologies drive wide swings in cost per square foot. The table below summarizes typical ranges and primary sources:
| Building type | Cost per square foot | Sources |
|---|---|---|
| Infill apartments | $100–200 | SoFi |
| Low-rise (1–3 stories) | $150–575 | Construct Estimates, RSMeans |
| Mid-rise (4–7 stories) | $200–475 | Construct Estimates, RSMeans |
| High-rise (8+ stories) | $250–700 | SoFi, RSMeans |
| Prefabricated/modular | $150–400 | SoFi |
Adjust for location
Regional market conditions can shift costs dramatically.
Primary markets
Major urban centers like Manhattan and San Francisco often exceed $450 per square foot due to high land values, labor rates and complex regulations (Multifamily Loans).
Secondary markets
Metros such as Phoenix and Orlando typically range from $300 to $350 per square foot, balancing moderate land costs with growing demand (Multifamily Loans).
Tertiary markets
Rural and tertiary regions can see costs between $250 and $300 per square foot, aided by lower labor rates and fewer zoning challenges (Multifamily Loans).Across the Northeast and West Coast, development costs often exceed $250 per square foot, while the South and Midwest tend toward $100 to $250 per square foot thanks to more affordable land and labor (HelloData).
Factor unusable space
Approximately 15% of a multi-family building’s footprint is non-rentable space—elevators, mechanical rooms, corridors and amenities. To convert net rentable area into gross buildable area, multiply by 1.15. This adjustment ensures you don’t understate your total construction scope when applying cost per square foot benchmarks.
Apply economies of scale
Larger projects often benefit from bulk purchasing and more efficient on-site workflows, reducing unit costs. Key scale considerations include:
- Bulk material discounts on concrete, steel and finishes
- Spreading fixed costs (architecture, permits) over more square footage
- Streamlined site logistics and labor productivity
However, beyond a certain size, complexity of construction sequencing and systems integration can increase per-square-foot costs, so verify your scale assumptions with comparable projects.
Integrate data into appraisal
In the cost approach to valuation, you calculate:
- Land value
- Reproduction cost (cost per square foot × gross area)
- Soft costs and contingencies
- Depreciation allowances
This model yields an indication of replacement cost new, which you reconcile with sales comparison and income approaches. By anchoring your cost per square foot inputs in up-to-date benchmarks, you enhance the credibility of your appraised value in pre-construction scenarios.
Guide lending decisions
When you incorporate precise cost per square foot data into your underwriting, you can:
- Set realistic loan-to-cost and loan-to-value ratios
- Allocate adequate construction contingencies
- Align draw schedules with projected work progress
For a holistic view of your financing structure, see our overview of real estate development financing. To benchmark your assumptions against current market rates, review our analysis of cost to build multi-family. At Mountain Cove Homes, we apply these rigorous methodologies to ensure your pre-construction appraisal is both transparent and defensible.
Key takeaways
- The national average cost per square foot for multi-family construction is approximately $350, with a typical 2025 range of $220–700.
- Building typology drives cost variation: infill, low-rise, mid-rise and high-rise each have distinct per-square-foot benchmarks.
- Location can swing costs from as low as $100 to over $700 per square foot; adjust for primary, secondary and tertiary markets.
- Always account for unusable space (around 15%) when converting net rentable area to gross buildable area.
- Integrate cost per square foot data into the cost approach to bolster your pre-construction appraisals and lending parameters.
Frequently asked questions
- How do I determine the right cost per square foot benchmark for my project?
Review comparable projects by building type and region, then adjust for design complexity and site conditions. - What factors can cause my cost per square foot to exceed national averages?
High-end finishes, complex MEP systems, stringent local regulations and labor shortages can all drive up costs. - Why is it important to include unusable space in cost calculations?
Excluding corridors, shafts and amenity areas understates total building volume, leading to underestimated budgets and appraisal values. - How can I verify that my cost estimates are realistic?
Cross-check against multiple data sources such as RSMeans, SoFi, Construct Estimates and local contractor bids. - Can modular construction methods lower my cost per square foot?
Prefabricated or modular techniques often reduce on-site labor costs and schedule durations, with per-square-foot rates of $150–400 depending on design and transport logistics.