Build to suit developments are considered the most sought after and universally beneficial project delivery methods in the commercial real estate industry. But what makes build to suit so universally beneficial? Well, developing build to suit properties involves working directly with the client to fully meet the functional, aesthetic, and corporate criteria. Follow along for more benefits of build to suit developments!
Advantages of Build to Suit
While a build to suit lease back is generally believed to be more expensive than leasing an existing commercial real estate location, the difference is often times offset in the long-term savings of space efficiency, reduced operating costs and an improved company image. The key advantages of a build to suit location are:
- Minimized up front out of pocket build-out costs
- A newly constructed building
- A specifically designed and customized building tailored to the tenant’s needs
- Pre-Negotiated long-term lease rental rate
- Reduced long-term costs
The many advantages of build to suit also include allowing the tenant to achieve maximum space efficiency as the space is specifically designed for the tenant, which allows for companies with specialized needs or layouts that rarely fit a typical space for lease on the open market. New construction allows a developer to incorporate cost-effective energy systems and preventative maintenance measures into the project resulting in a reduction of long-term operating costs.
Ultimately, with this type of structure, you the tenant will have maximum design input to create a building that will serve for future expansion and utilize materials and design elements that reflect the company’s culture and desired image. Build to suit typically requires a long-term commitment on behalf of the tenant to qualify for financing for the construction of the new facility. However, the savings in space efficiency and operating costs far outweigh the long-term commitments and expenses.
Build to Suit Financing
In today’s commercial real estate environment, understanding the build to suit alternative will provide new options for businesses new location developments. Some of the factors that determine the specific costs of a build to suit project include location, size, length of lease, credit of the tenant, and specific improvements. While build to suit developments can lean towards more of a cost commitment than say leasing existing space, the space and efficiencies build to suit projects provide may help offset the costs. In addition, did you know that a longer-term lease generally allows the developer to achieve….that’s right… more favorable FINANCING! As a result, this translates into a reduction in rental rate.
In Summary
All in all, the specific design requirements of the tenant will play a significant role in establishing the cost of the project. SCGWest understands that developing build to suit properties implies working to fully meet the operational needs of our clients. By partnering with a qualified commercial developer (SCGWest Development), organizations seeking relocation or new locations can direct their capital and human resources toward growing their business instead of managing long-term construction. Therefore, our site selection, design build, and construction teams will use the collective knowledge, experience, and proven process to ensure the ultimate success of the development.
