Steel Versus Wood Construction for a New Shop

A business owner gets advice on construction of a new building. March 26, 2009

We need to build a building for our small business. We plan to put a living area in it and live in it as well for the time being. Size will be 80 x 120 x 18.

I have a steel building selected by a friend at 80 x 150 x 18 with a cost of 57K to my door, but of course that does not cover anything else. This is a real distressed sale so I cannot make it smaller or drop the 2:12 pitch. Total price erected will be around 145K. We have since been looking at all wood construction because of cost. By the numbers, it looks like I can do the wood building for around 100K. I am considering simple stud walls and no pole barn because those poles with eventually rot and then I'd have nothing left. We are engineers here, so designing a free span wood building can be done, but I am really wondering if I will beat myself later for using wood?

Right now, I need square footage and I need it at a certain price. I can see benefits of both because I will fully insulate, have climate control, and build a living area in it. I know steel will last a lifetime, but wood really should too if taken care of. Both would be sheeted with metal.

Forum Responses
(Business and Management Forum)
From contributor B:
If you are going to build this in an industrial area, then you should go with steel. When it comes time to sell the building, you will find many will shy away from wood for an industrial environment.

If this is in a rural setting, then you might be better off with wood. A wood building can more easily be made to blend with the surroundings. An example would be building it to look like a barn... cupola and all.

In either case, that seems to be quite a bargain for the steel building. You may have to pay more up front, but will probably end up with greater equity.

From contributor J:
Steel, or you might look at hollow concrete block and bar joists, depending on location, especially if you want insulation.

From contributor O:
I don't know where you live or where you plan to build, so I don't know if this applies to you and your area or not. The most cost effective building over the long run is ICF walls with a sprayed-on foam on the underside of the roof. It is also the best type of house to live in. Quiet, even temp all year, very low heating or cooling costs, reduced insurance rates. It takes about 3 years to pay for the extra up front costs, but after that the monthly expenses go way down.

From contributor C:
A steel building will cost less to insure for fire insurance than a wood frame. When I was financing my building, I was required to carry fire insurance by the lender (SBA). It seems that when the insurance folks know that you must have insurance, they are a little more aggressive on their pricing. I used to complain that the insurance payment was more than a payment on a Mercedes Benz. Now that I own my building, I was able to cancel the exorbitant fire insurance and self insure at a substantial savings. Steel and sheetrock will not burn. I'll save my money and take my chances.

From contributor L:
We have a rigid frame steel building. 80' clear span and 18' sidewalls (sure wish the sides were another 2' higher). You could make your 18í walls into 20í with a low concrete wall. We have a steel liner 7' high all around the inside, but above that holes have been made in the fiberglass insulation, then taped. Also forklifts are not kind to steel panels. Best thing I did was put extra overhead doors on opposite sides of the building for getting lots of air flow-through. We are fully sprinklered by code and even to more than code on the additions that were made after getting insurance.

As for fire resistance, itís the contents that burn, then the steel building collapses because it starts to lose strength at about 600F. Rigid frame buildings have the tapered columns that interfere with the use of the space. I've had a shop in a concrete block building without insulation other than vermiculite in the cores - bad deal in our climate. If I were to do a new building it would be tilt-up concrete insulated panels. Another disadvantage of metal is the panels are screwed on from the outside; anyone with a battery operated screw gun can quickly run the screws out and pull back the panels for a little midnight tool supply.

From the original questioner:
You have me curious about these prefab concrete panels. Is this a more costly way to go? What are the benefits? Would you think a stud walled stick build would work for you? I sure see it as easy to change if needed, straight walls to build off, etc. But...

As far as insurance, this will just be a residential building for right now. Minimal business function in it. I have not priced insurance but sure sounds like I need to give that a look. I may be one of those guys to insure my contents and roll the dice on the building. I heard it can cost 1K/mo to insure a building this size. Jeez, in 4-5 years, I could just replace the building at that price.

From contributor L:
There are companies in all the major metro areas that specialize in tilt-up concrete. Most do the casting on site. A few years ago a motorcycle shop built a quite large showroom and repair shop using tilt-up and bar joist roof. He told me it was $60K cheaper than the steel building price.

Your building insurance rate will depend on how far from the fire station (1mile), how far to the water supply (30'), construction (steel 25,000SF), contents (woodworking), activity (do you spray/store flammable liquids? no), central station fire alarm (no), fire sprinkler (yes), etc. Talk to an insurer that specializes in woodworking businesses before you build.

Our insurance: building value $845,900, loss of income coverage, deductible $5000, business liability $1,000,000, medical $5000, general aggregate $2,000,000, products completed $2,000,000. Annual premium $557 + business liability cov-L $816 = Total $1373/yr. This does not include our other insurance for work-comp, other liability, etc. that comes to about $40,000/yr.

From the original questioner:
That is very nice of you to post your numbers. I will have to contact my insurance to see how this will play out. I will say that this will be a residential unit with conditional use for a small home business for now. Next building will be dedicated. This one is a catchall. What kind of building do you call the preformed concrete? Is the R-value there? How the heck do you finish it off?