The Real Cost of a Building
Harmonizing sustainability, energy efficiency & life cycle costs
BY ROHIT SOOD
A new building represents more than just a physical structure; it embodies a vision, a commitment and a significant financial investment. The process of bringing a facility to life involves securing financing, establishing a budget, acquiring property, and assembling a team of architects, engineers and contractors. While these steps lay the foundation for success, the true cost of a building extends far beyond the initial price tag.
Life Cycle Cost of a Typical Commercial Building
This diagram represents a proportional comparison of the initial cost of a building (design & construction) in contrast to the cost of operating and maintaining that building for its like.
Every decision made during the design phase leaves a lasting imprint on future operational expenses. From energy consumption to maintenance requirements, these choices shape the financial sustainability of a building for decades to come. Yet, the long-term costs associated with ownership often receive less attention than upfront construction expenses. The reality is that the cost of operating and maintaining a facility frequently surpasses the original investment, making strategic planning essential to achieving long-term financial efficiency.
Understanding building life cycle costs
Life cycle cost encompasses the total financial commitment of a building over its lifetime. This includes not only the initial investment, but also ongoing expenditures related to energy use, maintenance and future renovations. Several key factors contribute to this total cost:
- Professional fees (architectural, engineering, specialty consultants, surveying, etc.)
- Financing costs at the time of construction
- Construction costs, influenced by market conditions, building size, complexity and finishes
- Permits and impact fees
- Maintenance and operational practices over time
- Renovations and upgrades performed throughout the building’s lifespan
- Sustainability and energy efficiency measures integrated into the design
Each of these elements plays a crucial role in determining the overall financial impact of a building.
With commercial buildings often exceeding a lifespan of 30 years, thoughtful design choices can lead to substantial long-term savings. While some energy-efficient strategies may slightly increase initial costs, they have the potential to lower operational expenses significantly, making them an investment in both financial and environmental sustainability.
The bigger picture: Energy consumption & rising costs
In the United States, commercial buildings account for an enormous share of energy use nationwide. According to the U.S. Department of Energy, these structures cover 93 billion square feet of U.S. real estate and, in 2023, were responsible for 18 percent of the country’s total energy consumption — more than the entire energy consumption of Canada. This usage came with a staggering price tag of US$190 billion, with electricity alone accounting for 35 percent of the total.
A study by the Commercial Building Energy Consumption Survey (CBECS) examined energy use in office buildings, revealing significant financial implications. On average, U.S. office buildings spent US$1.44 per square foot on electricity and US$0.30 per square foot on natural gas. The majority of energy consumption came from cooling, heating, ventilation, plug loads and lighting — elements that collectively represented approximately 20 percent of total operational expenses.
With energy prices expected to rise annually, these costs will continue to escalate, adding financial strain to businesses and organizations. Historical data from the U.S. Energy Information Administration underscores a consistent upward trend in energy costs since 1960, reinforcing the need for forward-thinking design and efficiency strategies.
A future built on efficiency
The evolution of energy codes has raised the bar for efficiency in both commercial and residential construction, shaping a more sustainable future. These regulations establish minimum standards, but the most forward-thinking projects go beyond compliance, seeking higher performance through innovation and strategic planning.
By prioritizing energy-efficient solutions, integrating sustainable materials and embracing long-term cost-saving measures, buildings can be designed not just to meet present needs, but to support financial and environmental responsibility for years to come. The balance between affordability, efficiency and performance is not just a challenge; it is an opportunity to redefine what it means to build for the future.