As a Real Estate Developer/builder and Broker for over 35 years I agree that your "PSF" values are off, but not necessarily wrong. A room that small may need every sub contractor and building permit; that would add to the PSF cost significantly. If that room were twice as large, its PSF cost would reduce to a much lower number. As an example, I had priced closing in two porches of a two family house that approached and $80,000 cost and a second estimate came in at the exact price. Neither one of us got the job due to economic reasons. It just didn't make financial sense.
A full service Real Estate Company in the North East