When planning the construction of a factory or warehouse, the first figures to understand are the typical cost per tsubo and the total project budget. However, if you estimate costs based on the tsubo rate alone, there is a real risk that the result will differ significantly from the actual cost. This article organizes cost data by structure type, key considerations for ancillary work, and practical ways to use subsidy programs.
What is the typical cost per tsubo for factory and warehouse construction?
According to the Ministry of Land, Infrastructure, Transport and Tourism's Building Starts Statistics Survey, the average factory construction cost per tsubo in fiscal 2020 was about JPY 705,000 nationwide, or roughly JPY 197 million per building.
Approximate costs by structure type (per building):
- Wooden structure：about JPY 26 million
- Reinforced concrete structure (RC)：about JPY 401 million
- Steel reinforced concrete structure (SRC)：about JPY 424 million
- Steel structure：about JPY 223 million
- Concrete block structure：about JPY 5 million
In recent years, more systemized production processes have helped reduce costs compared with conventional methods. Even so, the cost per tsubo is only a reference point, and it can vary by location and specification even when the design is the same.
Pay close attention to ancillary and optional work costs
Factory and warehouse construction costs often include many ancillary works that are not part of the standard contract scope. Once ancillary work and optional items are added, it is not unusual for the total to reach several times the tsubo rate.
Examples of common ancillary and optional works:
- Demolition work and ground improvement
- Electricity, water supply, and sewer connections
- Heating, cooling, and air-conditioning equipment
- External works
- Permit application fees and drawing preparation fees
- Security systems
For factories and warehouses in particular, electrical systems, air conditioning, and security are essential in many cases, and if the exterior wall area is large, costs increase accordingly. Rather than relying on the tsubo rate alone, it is important to compare total construction costs including ancillary work.
Reduce costs by using subsidy programs
Business Restructuring Subsidy
This subsidy program, administered by the Small and Medium Enterprise Agency, supports new business development and business transformation suited to the post-COVID environment. Eligible expenses include building costs, machinery and equipment, technology introduction costs, and advertising and promotion expenses. Grant amounts range from JPY 1 million to a maximum of JPY 150 million, depending on the funding category. Key requirements include a decline in sales, preparation of a business restructuring plan, and coordination with a certified support institution for management innovation.
Supply Chain Measures Subsidy (Domestic Investment Promotion Project Subsidy)
This subsidy is intended to strengthen supply chains that were weakened by the impact of COVID-19. Eligible expenses include facility construction costs for factories and warehouses, as well as equipment and machinery costs. The subsidy rate is between 1/4 and up to 2/3 for eligible project category A, and up to 2/3 for eligible project category B under the SME special provision.
Related reading
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- Is real estate investing difficult because comprehensive capability is lacking? Explaining the three barriers of tax, legal, and construction issues
Frequently Asked Questions (FAQ)
Q. How can I research the cost per tsubo for factory construction?
A. Data from the Ministry of Land, Infrastructure, Transport and Tourism's Building Starts Statistics Survey is a useful reference. It is also important to request quotations from multiple contractors and compare total prices including ancillary work.
Q. Which is better suited to factory construction, steel structure or reinforced concrete?
A. From a cost standpoint, steel structure has an advantage and can reduce expenses substantially compared with RC construction. Where strength and fire resistance are critical, RC or SRC structures are chosen. The right option depends on the intended use and project scale.
Q. How do I apply for the Business Restructuring Subsidy?
A. Applications can be submitted online through the Digital Agency's subsidy application system, "jGrants." A business plan prepared in coordination with a certified support institution for management innovation is required.
Q. Can small-scale warehouses also use subsidy programs?
A. The Business Restructuring Subsidy is also available to small and medium-sized enterprises and sole proprietors. In some cases, the SME special provision under the Supply Chain Measures Subsidy (up to JPY 500 million) may also be available. Please check the application guidelines for each program for details.
