Food Retailers Face Rising Construction Costs

ARLINGTON, Va. -- Food retailers faced significant construction cost increases in 2005, according to a study released Friday by Food Marketing Institute here. The average supermarket cost $6.5 million to build in 2005, or $146.70 per square foot, vs. $5.5 million in 2004, or $124.86 per square foot, an increase of 17% on a square-foot basis, the report said. The study, “Facts About Store Development 2006,” said the costs of asphalt, steel and electrical construction were all up by more than 20%, and concrete, masonry, plumbing and lumber costs grew by more than 15%. More than one-third of the retailers that opened stores in 2005 (35.5%) retrofitted standing structures, which cost an average of $88.70 per square foot, 40% less than the cost to build a store from the ground up. Remodeling costs increased 45.5%, to $64 from $44 per square foot. Remodeling costs averaged $1.9 million in 2005. Retailers also opened more niche stores in 2005 -- particularly Hispanic-focused formats -- and continued to add more services such as fresh seafood, delis and prepared foods.