ST. LOUIS — Design/build and retail services firm NewGround has recently released a white paper examining why the cost of building financial institutions is on the rise.
According to the paper entitled Deconstructing Sticker Shock: Why the Cost of Building is on the Rise, in addition to the rising cost of construction materials, consumer demand for a customized, dynamic financial institution is also driving up the cost of construction.
"Nationally, total construction costs are up 8% over last year's costs and there has been no indication of a future slowdown. And while there has been a downturn in the residential market over the last few months, the total residential construction value is still 50% more than what it was four years ago. This small decrease does not off-set the mega-leap from $400 billion being spent in 2002 to cover $600 billion in 2006," said NewGround Senior Vice President, Design and Construction Bob Mannion.
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According to Mannion, as financial institutions incorporate more customized and experiential design elements to re-invent banking environments to more of a retail experience–the costs associated with creating such facilities rise.
"Today's branch isn't your father's Oldsmobile. Financial institutions must be designed to attract, speak to, engage and retain specific customer segments to be competitive in today's market. These new environments are driving the cost of a branch higher, but the investment in infrastructure will reward both customers and the bottom line," said Mannion.
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