Understanding the Cost Breakdown of a Commercial Construction Project

When planning a commercial construction project in Ontario, one of the most important — and often most overwhelming — questions is: What will it cost? Understanding how a commercial build is priced, what components are included in the total budget, and where unexpected costs can arise is essential for any developer, investor, or business owner.

At FCC Builders Canada, we believe in transparency and education. Whether you’re building a retail plaza, warehouse, office space, or hospitality development, knowing how your budget is allocated will help you plan smarter, manage risk, and make informed decisions. In this blog, we break down the typical cost structure of a commercial construction project and what you should expect at each stage.

1. Pre-Construction Costs

Before construction begins, there are several important investments required to assess feasibility and obtain approvals. These costs are foundational and include:

• Land acquisition (if not already owned)

• Zoning reviews and legal fees

• Architectural and engineering design

• Land surveys, geotechnical and environmental reports

• Permit fees and municipal development charges

• Site plan approval process costs

Depending on the municipality and project scope, pre-construction costs can range from 5% to 10% of the total budget. These upfront expenses ensure your project is viable, buildable, and legally approved.

2. Hard Costs (Construction Costs)

Hard costs — also known as “brick and mortar” costs — are the direct expenses associated with building the physical structure. This is usually the largest part of the budget and typically accounts for 65% to 75% of the total project cost.

Hard costs include:

• Site preparation (grading, excavation, demolition, erosion control)

• Foundation and structural framing (concrete, steel, wood)

• Exterior envelope (walls, windows, doors, roofing)

• Interior construction (walls, ceilings, flooring, finishes)

• Mechanical, Electrical & Plumbing (MEP) systems

• Fire protection and life safety systems

• Elevators (if applicable)

• Parking lots, sidewalks, landscaping

These costs can vary based on project size, complexity, materials used, and local labour rates. For example, as of 2025, average commercial construction costs in Ontario range as follows:

• Retail/commercial plazas: $200–$350/sq. ft.

• Office buildings: $250–$400/sq. ft.

• Warehouses/industrial buildings: $120–$250/sq. ft.

• Medical/institutional buildings: $300–$500+/sq. ft.

3. Soft Costs

Soft costs are non-physical but essential to the project’s success. They typically make up 15% to 25% of the overall project cost and include:

• Professional fees (architects, engineers, consultants)

• Project management and construction management fees

• Legal and accounting services

• Insurance and bonding

• Marketing and leasing (for developers with tenants)

• Financing costs (interest, lender fees)

While these costs aren’t visible in the final product, they are critical to ensuring your project stays compliant, coordinated, and financially viable.

4. Contingency Allowance

No matter how well-planned a project is, unforeseen circumstances can — and often do — arise. A contingency budget is set aside to cover:

• Unforeseen site conditions (e.g., poor soil, underground utilities)

• Design changes or scope adjustments

• Permit or inspection delays

• Material or labour cost fluctuations

Industry best practices recommend setting aside 5% to 10% of your total budget for contingency. At FCC Builders Canada, we always include this buffer to protect our clients from avoidable financial stress.

5. Furnishings, Fixtures & Equipment (FF&E)

If your commercial building includes office space, retail stores, or hospitality functions, you’ll need to budget for FF&E. This includes:

• Desks, chairs, and office furniture

• Kitchen appliances and restaurant equipment

• Lighting fixtures, signage, window coverings

• Specialized tenant improvements

This cost category is highly variable depending on the nature of your business, but it should be accounted for in the early stages of budgeting.

6. Occupancy and Operational Readiness

The final stage of your project includes costs related to inspections, approvals, and preparing the building for tenants or customers. These can include:

• Final building inspections

• Occupancy permit applications

• Utility hookups and service deposits

• Janitorial and move-in services

• Staff training and opening-day logistics

While relatively small compared to other costs, these “finishing touches” are important to ensure the smooth launch of your new commercial space.

The FCC Builders Canada Advantage

At FCC Builders Canada, we take a collaborative approach to commercial construction budgeting. Our process includes:

• Transparent, itemized cost estimates

• Value engineering recommendations to stay within budget

• Experienced cost control and scheduling from start to finish

• Clear communication to help clients understand where their money is going

We work with developers, business owners, and institutional clients across Ontario to deliver commercial projects that are financially sound and built to last.

Let’s Build With Confidence

Understanding the cost breakdown of a commercial construction project isn’t just about numbers — it’s about knowing what to expect, where your money is going, and how to make smart decisions throughout the process.

Ready to build a commercial property in Ontario? Contact FCC Builders Canada today to schedule a consultation and receive a detailed, customized cost breakdown for your project.