Cost of Renovation vs. New Commercial Construction in Canada
🎧 Audio Blog: Cost of Renovation vs New Commercial Construction in Canada
Listen to our blog instead of reading it! In this episode, we compare renovation costs with new construction projects in Canada's commercial sector.
When Ontario businesses decide between renovating an existing commercial space or building a new one, they face a critical choice that impacts their budget, timeline, and future growth. In Canada, and especially in Ontario’s bustling cities like Toronto and Mississauga, costs vary widely, and factors like location, materials, and sustainability play a big role. HKC Construction, a trusted Mississauga-based contractor, helps businesses navigate these decisions with cost-effective, sustainable solutions. This blog explores renovation versus new commercial construction costs across Canada, with a deep dive into Ontario’s market, and shows how HKC Construction can make your project a success.
Understanding Renovation vs. New Construction Costs
Renovation updates or reconfigures an existing commercial space, like modernizing an office or expanding a warehouse. New construction builds a facility from scratch, offering full design control. In Canada, commercial renovation costs range from CAD 50–250 per square foot, while new construction costs CAD 200–490 per square foot, depending on location, materials, and project scope.
Renovation Example: Renovating a 1,200-square-foot office in Toronto at CAD 200 per square foot costs about CAD 240,000. This covers new flooring, lighting, and HVAC upgrades, using the existing structure to save money. Renovations are faster, taking weeks to months, and allow businesses to stay open during phased work.
New Construction Example: Building a 10,000-square-foot office in Mississauga at CAD 250 per square foot costs around CAD 2.5 million. Costs include land, permits, and utilities, making it pricier and longer (months to years). New builds offer modern designs and energy savings.
In Ontario, costs are higher due to urban demand and labor shortages. For example, Toronto’s renovation costs average CAD 200–300 per square foot, while new construction ranges from CAD 300–400 per square foot. Smaller Ontario cities like Kitchener or London see lower costs (renovation: CAD 150–200, new construction: CAD 200–300).
Key factors affecting costs:
Location: Ontario’s Greater Toronto Area (GTA) has high land and labor costs, while rural areas like Sudbury are cheaper.
Materials: Premium materials like wood or glass increase costs, while concrete or steel are more affordable.
Labor: Ontario’s skilled labor shortage raises wages, with contractors charging CAD 30–50 per hour.
Design: Complex designs, like retail showrooms, add to expenses.
Ontario’s Commercial Construction Market
Ontario leads Canada’s commercial construction, driven by projects like Toronto’s Union Centre (a CAD 3.5 billion office tower) and Mississauga’s M City development. In 2024, Ontario’s commercial construction market was valued at CAD 20 billion, part of Canada’s CAD 266.7 billion construction industry. By 2033, it’s expected to grow at a 5.1% CAGR, fueled by demand for offices, retail, and mixed-use spaces. The province faces challenges like rising material costs (steel at USD 709 per ton in 2024) and a projected shortage of 700,000 trade workers by 2028. Despite these, Ontario’s focus on sustainability, including Buy Clean policies, makes it a hub for green construction.
Benefits and Challenges of Renovation vs. New Construction
Renovation Benefits: Renovations save money and time, allowing businesses to keep operating. They can use sustainable materials, like low-carbon concrete, to meet Ontario’s environmental goals. For example, Buy Clean policies could cut 4 million tonnes of emissions by 2030, equal to removing 850,000 cars. However, older Ontario buildings (pre-1980s) may have issues like asbestos, raising costs.
New Construction Benefits: New builds offer custom designs, energy-efficient systems, and lower maintenance costs. They can attract premium tenants and qualify for tax breaks, especially in Ontario’s growing cities. Challenges include high upfront costs, longer timelines, and potential disruptions, especially in the GTA’s busy markets.
How HKC Construction Can Help
Founded in 2010 by Helen and Kosta Mentis, HKC Construction is a Mississauga-based general contractor ranked #35 on The Globe and Mail’s 2024 Top Growing Companies list with a 1,186% three-year revenue growth. Specializing in commercial and industrial projects across Ontario and Canada, HKC delivers high-quality, sustainable solutions. Here’s how they help:
Cost Control: HKC provides clear cost estimates, sourcing local materials to counter rising costs and potential U.S. tariffs (e.g., CAD 6 billion added to lumber costs annually).
Sustainability: HKC uses low-carbon materials aligned with Buy Clean policies, supporting Ontario’s 40% emissions reduction goal by 2030. Their projects often meet LEED standards.
Efficiency: Using Building Information Modeling (BIM) and modular construction, HKC cuts timelines and costs by up to 20%, earning a 5.0-star client rating.
Ontario Expertise: With a strong presence in the GTA, HKC navigates local regulations and labor challenges, ensuring smooth project delivery in cities like Toronto and Ottawa.
Client Focus: HKC tailors solutions, offering post-construction maintenance and a collaborative trade network for seamless execution.
Contact HKC at www.hkcconstruction.com or (905) 696-048 for your Ontario project.
Case Study:
Dual Expansion and Renovation of Industrial Facility in the GTA
In 2024, HKC Construction successfully completed a dual expansion and renovation of a 40,000-square-foot industrial facility in the Greater Toronto Area for a packaging manufacturer. The project involved a 15,000-square-foot plant expansion and a full renovation of 10,000 square feet of existing space, including administrative offices and quality control labs.
To ensure uninterrupted operations, HKC implemented a phased construction plan and coordinated closely with plant managers to schedule high-impact work during off-peak hours. The expansion used pre-engineered steel framing and insulated metal panels, while the renovation included upgraded epoxy flooring, new HVAC systems, and improved lighting for better working conditions.
The entire project was delivered in 8 months at a cost of CAD 6.2 million, staying within budget through early procurement and value engineering. By integrating high-efficiency HVAC units and LED lighting with occupancy sensors, the client saw a 20% reduction in annual energy costs.
Additionally, the use of Building Information Modeling (BIM) helped reduce design conflicts, improving coordination and cutting planning time by 15%.
The client commended HKC for maintaining safety and productivity throughout the process, calling the team “exceptional in communication, flexibility, and quality.” This project further cemented HKC Construction’s reputation as a reliable industrial contractor in Ontario.
Cost Comparison Across Canadian Cities
The chart below compares renovation and new construction costs per square foot in Canadian cities, with Ontario’s Toronto and Mississauga showing higher costs due to urban demand.
Renovation vs. New Construction Costs in Canadian Cities (2024)
Why Choose HKC Construction in Ontario?
Ontario businesses face unique challenges, from high GTA costs to labor shortages. HKC Construction’s local expertise, sustainable practices, and innovative technology make them the ideal partner. Whether renovating a Toronto retail space or building a new Mississauga office, HKC ensures projects stay on budget, meet environmental goals, and exceed expectations. Their 50% women-owned leadership and Great Place to Work certification reflect their commitment to quality and inclusivity.
References:
BUILD IT, Cost of Renovation vs. New Commercial Construction, 2021, https://buildit.ca/blog/cost-of-renovation-vs-new-construction-commercial/
Calahan Construction, Industrial Building Construction, Expansion, or Renovation, 2021, https://calahanconstruction.com/industrial-building-construction-expansion-or-renovation/
Clean Energy Canada, Building Toward Low Cost and Carbon, April 9, 2025, https://cleanenergycanada.org/building-toward-low-cost-and-carbon/
Clean Energy Canada, Facing tariffs, Canada has a clever, cleaner trade compliant tool, 2025, https://cleanenergycanada.org/facing-tariffs-canada-clever-cleaner-trade-compliant-tool/
IMARC Group, Canada Construction Market Report, 2025–2033, https://www.imarcgroup.com/canada-construction-market
HKC Construction, https://www.hkcconstruction.com
