Understanding Soft Costs in Commercial Real Estate: Architecture and Engineering

Jun 19, 2024

Understanding Soft Costs in Commercial Real Estate

When investing in commercial real estate, it's crucial to understand all associated costs. One significant category is soft costs. These are expenses not directly tied to the physical construction of the building. Instead, they cover services and fees that support the project. This post will focus on two key components: architecture and engineering.

What Are Soft Costs?

Soft costs include various non-construction expenses. They often involve professional services, permits, and administrative costs. These costs are essential for the project's success, even though they don't contribute to the physical structure.

architecture blueprints

Role of Architects work includes creating blueprints, securing permits, and overseeing the construction process. The fees for these services are considered soft costs.

Architectural services can be broken down into several stages:

  • Concept Design: Initial sketches and ideas for the project.
  • Design Development: Detailed plans and specifications.
  • Construction Documents: Blueprints and technical drawings.
  • Construction Administration: Oversight during the building process.

Importance of Engineering

Engineering services are another critical soft cost. Engineers ensure the building's structural integrity and compliance with safety standards. They work on various aspects, including electrical, plumbing, and mechanical systems.

Engineering services often include:

  1. Structural Engineering: Ensuring the building can withstand stresses and forces.
  2. Mechanical Engineering: Designing heating, ventilation, and air conditioning (HVAC) systems.
  3. Electrical Engineering: Planning electrical systems and ensuring they meet codes.
  4. Civil Engineering: Managing site development and infrastructure.
construction site

Properly accounting for soft costs ensures a smoother project flow. It helps in securing financing and meeting deadlines. Investors and developers must factor in these costs from the beginning.


Soft costs, including architecture and engineering, are essential for any commercial real estate project. They ensure the building is designed well and meets all regulatory standards. By understanding and planning for these costs, you can set your project up for success.

For more information on managing soft costs, feel free to contact our expert team. We are here to help you navigate the complexities of commercial real estate investments.