In this special cost model update, Davis Langdon looks at 18 building types – including offices, stadiums, theatres, schools, hospitals, housing and supermarkets – and adds the latest figures and current cost drivers




Improvement to schools, resulting in high-quality schemes such as this primary school in Cheshire built by Willmott Dixon, is a significant cost driver




Buildings detailed in the cost model series over the past two years range from distribution centres, football stadiums, offices, hospitals and mixed-tenure housing. Sixty-eight models have now been published in Building, examining most building types and providing detailed coverage of broader issues including sustainability, infrastructure and off-site manufacture.

As the scope and coverage of the cost model series continues to grow, Davis Langdon hopes to continue to promote an understanding of the key cost and value drives associated with property development, and in particular:


  • To provide detailed elemental cost information derived from a generic building that can be applied to other projects
  • To provide a commentary on cost drivers and other design and specification issues
  • To compare suitable procurement routes that secure the client’s objectives.

In this cost model special, Davis Langdon updates the costs of 18 models, grouped together in office and commercial, sport and leisure, public sector, housing and retail.

Changes in market conditions

The past two years have seen evidence of a two-speed construction economy. High levels of activity in the private housing and public non-housing sectors across the UK have driven growth in construction output and increased pressure on tender prices, whereas levels of demand in the commercial sector, particularly in London and the South-east, have fallen away. As a result, although tender prices in London have remained relatively stable over the past two years, prices in hotspots such as the North-west have risen at rates of 5-6% a year.

Against the background of variable rates of tender price inflation, across-the-board advances in design and specification, driven by client requirements, have resulted in substantial movements in costs of building types. For example, in the public sector, there is currently a concerted effort to improve the quality of schools, hospitals and other assets, that has resulted in above inflation increases in capital cost, accompanied by significant improvements in quality, function and overall value.

By contrast, in highly competitive commercial sectors such as retail and distribution, developers and end users continue to challenge their supply chain to deliver buildings at a reduced cost. In other markets such as office fit-out, twin factors of subdued demand and a highly competitive supply chain mean that projects continue to be delivered at very competitive rates. For this reason, the costs summarised in this cost model update are based on recent projects rather than adjustment of previously published cost information.

Going forward, upward pressure on the costs of projects will be primarily driven by the following factors:


  • Material costs. Overall, material prices are rising at historically high rates, driven in part by substantial increased in steel and energy costs. However, other materials including cement, brickwork and asphalt are rising rapidly too. The degree to which price rises are sustained will be strongly influenced by world-wide demand for raw materials
  • Labour rates. Wages awards for constructional parties during 2004 were twice the going rate of the economy as a whole. Wage agreements that are currently in place for 2005 will see operative earnings increase by 4-10%
  • Continuing growth in construction output, forecast to increase 4% in 2005.

Other factors that will drive up costs include revised Building Regulations, particularly Part E concerning sound transmission, Part M in connection with access, and forthcoming amendments to Part L, which will aim to reduce carbon emissions for new non-residential buildings 27%. Regulations from the European Union can also have an impact, as illustrated by the EU Landfill Directive, which came into force in the UK in June 2002, which resulted in substantial increases in hazardous waste disposal costs. The most significant forthcoming regulation for construction deals with energy performance of buildings, which must be implemented in the UK by January 2006.

All-in estimating rates

The costs set out in this article are all-in estimating rates. It should be noted that the all-in rates exclude the following items:


  • Demolitions and site preparation
  • Site abnormals
  • Furniture, fittings and equipment (except where specifically noted)
  • External works and external services
  • Contingencies and design reserve
  • Professional fees
  • VAT

The range of costs set out in the tables provides an indication of the levels of expenditure, which reflect normal design and specification criteria, rather than an indication of maximum and minimum cost thresholds.

The all-in estimating rates should, except where stated, be applied to the gross internal area (gifa) of a proposed development. Rates are current at first quarter 2005 price levels, based, in most instances, on a South-east location. To adjust for other locations, refer to the table of regional variation factors below.





The brief for Squire and Partners’ refurbishment of 4 Grosvenor Place in central London included the creation of an impressive reception area




Car parks

Current cost drivers


  • Increase in space allowances and headroom to accommodate larger cars such as 4×4s and MPVs. Wider bays for easier access and parking. Larger structural grids of 16 × 7.5 m.
  • Adoption of chevron-based parking bay layouts to improve access for drivers and passengers and to improve planning efficiency.
  • Specification of facades to multistorey car parks.
  • Improved environmental quality in public car parks including enhanced finishes, signage and lighting.
  • Extensive security measures including CCTV systems and call points.
  • Automated car park controls and payment systems to reduce staffing requirements.

Warehouses and distribution centres

Current cost drivers


  • Requirements for fast programmes driven by the “just-in-time” expectations of logistics companies have driven down project durations for schemes of more than 20,000 m


  • on clear sites, to below 16 weeks. Extent of client fit-out, including modifications to the base building.Implications upon the shell design of mechanical handling, chilled storage and associated IT systems.Insurers’ requirements regarding roof and wall cladding insulation materials, fire compartmentation and sprinkler installations.Significant increases in costs steel products throughout 2004, affecting steel frames, wall and roof cladding, floor slabs, dock levellers and loading bays, which account for 50% of shell cost.


Business park offices

Current cost drivers


  • Sustainability and cost in use. Sustainability is seen as a differentiator for many corporate owner–occupiers. Developers are also responding actively to the sustainability agenda, driven in some instances by requirements of development agencies and other funding bodies.
  • Continuing rationalisation of institutional development standards and user requirements.
  • The emergency of new markets for small starter units, either promoted by development agencies or funded privately. Schemes featuring incubator units clustered to encourage interaction and collaboration between tenants are an emerging development trend.

West End and city-centre office buildings

Current cost drivers


  • Customer focus. Developers are tailoring their schemes to more closely match the needs of their target market while retaining flexibility to accommodate change over time. Developers who retain a long-term interest in their buildings are likely to invest in an enhanced specification to ensure longevity and sustained rental income.
  • Mixed use. Schemes incorporating extensive retail and housing require more complex transfer structures to accommodate different structural grids and involve complex access, fire escape and fire separation issues.
  • Planning issues. The impact of conservation areas, rights of light, protective view corridors and general planning requirements associated with neighbouring buildings may effect the size and shape of the building, quality levels and selection of materials.
  • Site conditions. Including existing foundations and basements, existing below-ground services, ground conditions or requirements for archaeological investigation.
  • Building efficiency. Including wall-to-floor ratio, storey height and aspect ratio.
  • Complexity and quality of design solution.
  • Building services. Including cooling loads, system selection and requirements for resilience and redundancy.
  • Procurement route. Determined by requirements for speed to start of construction and the client’s risk transfer strategy.
  • Building height. Key cost drivers for towers include structure, facade and lifts, together with building geometry and slenderness, buildability considerations, and environmental agenda. Planning, particularly concerned with the skyline and ground-level public realm, is also an issue.

Office refurbishment

Current cost drivers


  • Scope of refurbishment, driven by the location and nature of the base building, potential position in the market, economic conditions and the investment timeframe of the developer
  • Building condition, constraints on floor loadings and ceiling heights
  • Requirements to upgrade facades and building services to meet modern performance standards
  • Opportunities to increase floor area through infill or floorplate extension.

Office fit-out

Current cost drivers


  • Extent of modifications to the base building to accommodate tenant requirements.
  • Standard of specification and range of enhancements including joinery and bespoke furniture. For building services, requirements for redundancy and back up for critical and essential services, together with the density of IT points on office floors.
  • Extent of cellular and specialist spaces, such as meeting rooms and restaurants.
  • Reduced costs of high-quality components such as glazed partitioning due to an increase in the size of the market driven by current open-plan fit-out trends.
  • Benefits of a continuing highly competitive market place for commoditised fit-out components including raised floors and IT cabling.
  • High levels of contractor competition are resulting in continuing low margins, company failures and highly aggressive post-contract negotiations.

Stadiums and grandstands

Current cost drivers


  • Ground capacity. This determines the number of tiers, the type of roof, the extent of circulation, support and concession space, and the total size of the building.
  • Flexibility in use. Additional facilities such as hospitality, retail and club rooms increase the flexibility of the stadium, but are likely to result in greater gross floor area.
  • Tier arrangements. Requirements for second and third tiers are determined by overall seating capacity and to a lesser extent the size of the site. Multiple tiers offer optimised sightlines, but involve greater structural complexity together with extensive vertical circulation and planning issues related to massing and building height.
  • All-year operation. Diversification of the use of the stadium can involve ground sharing or a wider range of commercial activities. Accommodating these uses typically requires a higher specification, together with a wider range of services concessions, and additional club accommodation.

Leisure centres

Current cost drivers


  • Raised client expectations for modern facilities with requirements for the latest equipment, necessary to compete with private-sector health and fitness centres.
  • Development of standard off-the-shelf designs, such as Swim 25 and the Optimum Sports Hall, to deliver modern low-cost facilities aimed at local communities.
  • Continuing availability of funding from the Big Lottery Fund and Sports Lottery Funding to support the replacement of existing outdated municipal facilities.

Museums and art galleries

Current cost drivers


  • Total extent of gallery space and the standard of fit-out.
  • Mix of uses required, particularly non-gallery space such as lecture theatres, bars, cafes, restaurants and retail space, together with total extent of circulation and ancillary space.
  • Environmental control standards required and the control strategy adopted, based on a balance of passive and active systems.
  • Investment in interactive display technology and growing use of intranets as interpretation tools.
  • Constraints on the client’s budget, including availability of lottery funding.


Current cost drivers


  • Theatre function, either producing or receiving house, with associated requirements for production and management accommodation.
  • Size, form and function of the auditorium.
  • Requirements for rehearsal rooms and other performance space.
  • Requirements for a fly tower.
  • Mix of uses required, particularly non-theatre space such as galleries, cafes, restaurants and retail space, together with total extent of circulation and ancillary space.
  • Constraints on the client’s budget, including availability of lottery funding.
  • Theatre equipment requirements.





The City Inn, Westminster, designed by Bennetts Associates, is an example of a high-spec, luxury city-centre hotel





Current cost drivers


  • Demand for hotel development driven by double-digit increases in hotel revenues.
  • Consumer demand for larger guestrooms in mid-range hotels, with higher levels of specification. Comfort cooling/air-conditioning being introduced in lower end of the market.
  • Widespread adoption of more contemporary design in hotels aimed at a younger clientele with significant investment in the theatrical elements of hotel fixtures and fittings, particularly in bathrooms and open-plan kitchens in hotel restaurants.
  • Growth of style-led boutique hotel chains such as myhotel and Hand Picked Hotels.
  • Greater variety in room interior design and fittings to appeal to a wider range of guests.
  • Continuing demand for IT innovation, now extending beyond DVDs and plasma screens to wireless IT.
  • Continuing demand for remodelling and rebranding of existing guestrooms to move hotels into higher revenue market sectors.
  • Procurement of work in occupied buildings, with issues such as speed of work, phasing, out-of-hours working and health and safety, all of which can affect overall cost levels.
  • Introduction of super-budget pod hotels may allow previously uneconomic sites to be developed for hotel use.


Current cost drivers


  • Investment in City Academies and the Schools for the Future programme is aimed at driving up the quality of the school environment. This approach contrasts with some PFI schools where design and specification has been rationalised to reduce capital and operating costs.
  • Total floor areas are increasing to provide flexibility and space.
  • Plans to use schools as community facilities require enhanced standards of finishes, equipment and security.
  • Greater diversity in the curriculum, including more vocational courses and new ways of learning, is requiring the specification of larger “loose-fit” classrooms to accommodate different teaching methods.
  • More investment in circulation and other spaces to enable use for non-classroom-based learning activities including group work.
  • Additional costs associated with accommodating special educational needs pupils in mainstream schools.


Current cost drivers


  • The ratio of clinical to non-clinical accommodation, together with fixed cost allowances for primary clinical functions.
  • Impact of the NHS Plan, improving patient freedom as to how and where they are treated and improving quality, leading to increased space and specification standards.
  • Transfer of routine diagnostic and treatment services to non-acute sites, often outsourced to the private sector, resulting in an intensification of high-cost functional requirements in acute hospitals to serve a more complex workload.
  • Increasing extent of mechanical building services, particularly comfort cooling and forced ventilation.
  • Appraisal of schemes on the basis of total-occupancy whole-life costs.
  • Greater use of modular construction and off-site fabrication to reduce project delivery times.
  • The increasing use of partnering-based procurement to deliver public healthcare buildings, such as NHS Estates Procure 21.

Social housing

Current cost drivers


  • EcoHomes standards. A minimum standard of “good” will be required for all new-build social housing from April 2005 onwards.
  • Changes to Building Regulations, particularly affecting access, acoustics and substructures.
  • Development of higher quality housing for unregulated markets for key workers and for low-cost home ownership.
  • Working with private sector developers as part of a section 106 agreement accounts for an increasing proportion of the total work programme.
  • Wider adoption of modern methods of construction.

Private housing

Current cost drivers


  • Planning regulations requiring the provision of increasing proportions of key worker or affordable housing as part of private sector schemes. On larger schemes in London, this currently ranges from 35% to 40%, depending on the borough. The GLA is promoting a target of 50% for key worker and social housing.
  • Maximisation of net-to-gross ratio driven by density of apartments and vertical and horizontal access strategies.
  • Aspiration to meet high EcoHomes standards.
  • Enhanced acoustic performance to meet revised Part E of the Building Regulations.
  • Quality of the external envelope and wall–floor ratio.
  • Requirements for comfort cooling, together with the adoption of wet or all-electric heating systems in apartment developments.
  • Quality of kitchen and bathroom fittings.





Future Systems’ outlandish Paco Rabanne-inspired design has been made a reality at the new Selfridges department store at Birmingham’s Bullring




Shopping centres

Current cost drivers


  • Development of retail models based on an open shopping environment exemplified by Liverpool’s proposed Paradise Street.
  • Access and parking issues, including planning gain contributions to public transport schemes and the additional cost of parking provision on restrictive sites.
  • Use of retail to anchor mixed-use urban regeneration schemes.


  • Mixed-occupancy buildings have additional costs associated with fire separation of tenancies, complex circulation and servicing routes, and transfer structures.
  • Continually rising levels of customer expectation, set by new centres such as the Bullring, for a high quality shopping experience and a wider range of amenities and leisure facilities.
  • Increasing size of schemes, particularly mixed-use regeneration projects.

Department stores

Current cost drivers


  • Base building. Cost drivers include number of floors, net to gross ratios, and the number of entrances.
  • Shop fittings. Key issues include flexibility, life cycle and the extent of space fitted by the store.
  • Economies of scale driven by future workload and standardisation.
  • Flexibility, running costs and maintenance.


Current cost drivers


  • Competition. The big four supermarket chains continue to target cost reductions throughout their development supply chain.
  • Impact of the retail floor plan on sales area, storage and specialist areas including bakeries and restaurants.
  • Speed of construction, rationalised design and standard products.
  • Growing proportion of freshly prepared food requiring refrigeration.
  • Costs of S106 and S278 works associated with store development.