seems that if the basement is roughed in already that would be the easiest and least expensive way to go.
is the basement just one big room now? if so, just play around with floor plans until you find one you like and have your builder add walls where needed.
(or draw it up and post it here and we can have a go at it)
adding a floor to cathedral ceilings is going to be a much bigger job i think.

In many areas nothing below ground level is valued in an appraisal.

I'd add the room and windows (dormers?) upstairs to add value to the house -- and you wouldn't need to do any plumbing.

I'd certainly prefer to work in daylight than in a basement.

But in many other areas, finished basements ARE included in finished square footage and positively affect value. Do some research before you rule it out.

Doing the upstairs sounds like it could be a tremendous cost, but will definitely add more equity to the home than finishing out the basement. Did you get estimates for both projects?

How long do you plan on staying in the home? Is this your forever house or a 5-10yr house? If you plan on staying a long time, then the upstairs addition will pay off; if it's short term, you may not get the money back when you sell.

Otoh, as Chisue said, if it's for your offices, would you be okay working in the basement? Maybe you could make it work if you dug in egress windows? Or would you rather be able to look out the window? You should also do what makes your heart happy - you only live once and it's only money, you can't take it with you. (Unless your the type of person that loses sleep over spending large amounts of money, then maybe the basement ;)

so roof line of living area is lower than bedrooms next to it? when done, the new addition would be above bedrooms? see it a lot in our area. 2nd stories put on above garage. makes house look very blocky. or if you like the look, than go for it.

Actually the space has windows and a ceiling there would be no bump up, the ceiling is flat in the area that would become a loft. I looked on line and the builder seems to be building the same plan in a different city. The plan has a bonus room option in the space I was considering.

dad has single level townhouse. pitched roof. front to back. probably 100ft deep. the attic space in center of house has a 12ft vertical rise at least. i went up there during construction. just a sea of framing members. sure looks like it could accept a bonus room. if it would have been built that way to begin with.

If the room your considering is already finished and has windows and drywall wouldn't you just be adding flooring and some electrical outlets? This seems to me to be less expensive that remodeling an unfinished basement and you'd probably have better light and views. Of course the mostly difficult aspect would most likely be tying in the new floor joists.

Good luck!

"In many areas nothing below ground level is valued in an appraisal. "

While many areas do not count below grade in tax appraisals, it is counted in loan appraisals in many places if finished.

Our neighbor just converted a 2-story vaulted family room into a 2nd space upstairs. I didn't ask what it cost, but it was pretty simple in the construction scheme of things. They added a laminate beam spanning the space, added joists to the beam that also tied to the original framing, added support in the crawl space below the walls that the new beam rested on, since the load changed, and then finished with subfloor, carpet, electrical, and drywall.

When they told me they were thinking of closing in the 2-story height, I thought it was a bad idea. But after seeing the finished project, it worked out very well. A bonus was that there were already windows in the upper portion of the high wall, so they just became the windows of the new room.