What is a build-to-suit?
Build-to-suit’s are arrangements between developers and commercial businesses. In this arrangement, businesses hire developers to build a commercial property without putting any capital into the property. The developer designs (with the input of the business owner), finances, and constructs the property using their own capital. Once the property is complete, the business moves in, and begins to pay the developer rent.
What are the advantages of a build-to-suit?
- Guaranteed tenancy: The developer has a guaranteed tenant in the property, which is important since they are investing their own money into the project. Further, often times the tenant signs a triple net lease, meaning the tenant is then responsible for the costs maintaining the property.
- Customization: In a build-to-suit lease, the property can be built to fit the need of the tenant. This is important as it eliminates potential redevelopment renovations for the property owner and tenant.
- Reduced capital investment: Businesses do not need to use their own funds to finance the development of the property. As a result, they can invest their money elsewhere and help grow the business.