When you are considering opening a new bank facility, it is critical to understand all of the essentials that factor into the costs. Building a bank involves more than just owning the plot of land and hiring a few workers. In fact, the price range for a new facility can easily range from $1.0 million to $4.0 million, depending on size and many other variables.
How? There are a variety of factors at play, and each one makes an impact on the cost it takes to get started. Knowing what all goes into the cost of designing and building a bank will ensure you have a better estimate for the budget of your new branch.
How Much Does it Cost to Build a Bank?
The amount of money needed to do a bank project is dependent upon many factors. One of the most significant determiners is the physical size of the bank and the plot of land that will house it. This, and the other primary factors are outlined in the infographic our team at HTG Architects put together.
We hope it helps you to better understand all of the costs associated with starting up a new bank facility:
Know the Cost of the Plot of Land
The plot of land itself should be at the top of your priority list when estimating costs for a bank. This cost can range from $250k to $1.0 million. This estimate includes the site survey, soil test and lot purchase.
A site survey and soil test include asking questions prevalent to the longevity of your future institution. Some questions to bring forward before finalizing a land purchase are:
- What site restrictions are there, such as setbacks, easements, state and county road access?
- Are there any specific environmental issues tied to the plot of land?
- Is the property zoned for your intended use?
- Is there an existing survey or soil borings?
Understanding the answers to crucial questions, like the ones listed above, is important before accepting the final plot of land. Additionally, you’ll want to make sure an environmental assessment is conducted. Another consideration to factor when looking for a plot of land is the size. A rule of thumb is an 8,000-square-foot building can easily fit on a one-acre site.
Not surprisingly though, the size of land purchased for some new branches has decreased. In 2006, Bancography surveyed banks and credit unions across the United States regarding their deployment plans — covering the number, size and cost of branches. Bancography then conducted another survey in 2013 with another 70 financial institutions. The comparisons between the two indicated a decrease in the plot of land for newer institutions.
The average size for planned freestanding branches in 2013 was reported at 3,040 square feet, compared to 3,500 square feet in 2006. Despite this difference though, not all banks are embracing smaller branches. One in four respondents said they planned for new institutions of 4,000+ square feet.
Planned inline branches averaged 1,950 square feet; the planned sizes ranged from 750 square feet to 4,000 square feet.
Factor in the Cost of Materials and Labor
Consider the amount of money you will need to hire a contractor for the work done. When it comes to the cost of construction, there is a broad range — $500k to $2.5m. This number can vary significantly due to whether the work is a tenant improvement, remodel, addition, or a new facility. Some of these include:
- Size of general contractor
- Current economy and labor market (COVID-19)
Additionally, make sure to follow any restrictions associated with building the bank mentioned earlier to avoid potential lawsuits.
Exterior Landscaping Costs
Exterior landscaping can range from $6k to $30k. Knowing the importance of commercial exterior landscaping costs is just as vital as understanding the value of the land being purchased. This development of your exterior design for your facility is the first impression new customers will get before they even step foot in your door.
Green Gold Landscaping Inc. provides 6 landscaping tips to showcase your business property. Some of these include:
- Give attention to the entrance
- Choose attractive plants
- Allow for clear visibility
Providing a nice exterior look is sure to give new customers a positive experience with your new bank institution.
Don’t Forget About Buying Tech
Computers, phones and audio systems are a no-brainer for your bank. These costs are anywhere from $50k to $150k. They are necessary for the institution to function properly and you shouldn’t overlook them. Often, these can lead to better efficiency. Some 2020 banking tech trends include:
- Distributed cloud solutions
- Blockchain technology
- Voice-First Banking
Utilizing these technological tools will help you enable better communication and efficiency for your business — leading to more profit.
Create Aesthetic Appeal for Your Bank
Are you planning on hanging artwork? What about providing ergonomic-friendly workstations for your employees? The costs associated with your interior design range from $25k to $200k. And if you believe in investing in your employees’ and customers’ well-being, then you will invest in your interior design — for both functionality and aesthetic appeal.
Other Equipment Costs
Do you know how much your other equipment will cost you? From ATMs to printers and counters, your equipment costs range from $50k to $200k. An important question to ask is whether or not you’ll purchase this equipment used or new.
Additionally, you will need to consider the implicit costs, such as the upkeep and repairs; what is the additional cost of reloading receipt paper in your ATM machine? All of these play into your overall equipment costs.
Don’t Overlook Security Costs
Do you dread the idea of your bank being robbed? It’s a scary thought. The last thing you would want to overlook when estimating costs of opening up a bank is your security system. Ranging from $2k to $10k, alarms, safety surveillance and fire safety are the backbone of your institution. Investing in a sound security setup, including cybersecurity protection for your assets, will grant you peace-of-mind over the long haul.
So there you have it, all of the costs tied into starting up your new bank facility. From the timeline to the construction, you now know what it takes to build a bank. And our team at HTG Architects is here to guide you on your path to launching your bank.