What is a build to suit?
A build to suit is a commercial building specifically designed, constructed and developed to meet the specifications of one particular user, the Client.
Based on the company specifications, the client will hire a commercial developer. The developer will acquire, take ownership, and manage the risk of construction of the property. The tenant will then lease the property from the developer.
At Windsor, we develop BTS projects both for Lease and Sale.
What are the advantages of a build to suit?
In most cases, a new build to suit development tends to be a more cost-effective and less risky endeavour than some other types of development.
The buildings are fairly uniform/constant – meaning, the tenant has a standard their working off of, so you know what to expect. Therefore, the tenant has significant input into the design and construction. Ultimately, this approach helps to:
- Maximize space
- Maximize efficiency
- Reduce long-term costs
The creation of a tenant’s ideal property helps them to avoid settling for an existing structure that may not meet their specific requirements and therefore lack the needed efficiency.
What are the advantages of using a developer for a build to suit?
If a tenant uses a commercial developer to meet their build to suit needs, it can help protect the tenant from the downsides of handling their own development.
The developer will carry the financial burden of development of the project. So, instead of tying up capital in slowly appreciating real estate, tenants can use that to help grow their business.
It saves the tenant time and resources allowing for greater expansion, while also getting a facility that will allow them to meet their full potential.
Additionally, because most tenants seek double-digit returns, and with CAP and return rates in the single digits, deploying capital into development projects doesn’t always make sense.
What are the costs of a build to suit?
There are a number of factors that determine the specific costs of a build to suit the project. They may include:
- Location
- Size
- Type of Building
- A credit of the Tenant
- Length of Lease
- Municipal Requirements
- Specific Improvements
- Current State of Market
Typically, the specific design requirements of the tenant will play a significant role in establishing the cost of the project.
What is the lease structure of a build to suit?
The lease period may be longer than a typical lease. This is because build to suit properties are designed based on the specifications of a particular tenant. In many cases, they are at least 10 years + in order to provide a developer/landlord with a reasonable return on investment.A longer-term lease generally allows the developer to achieve more favourable financing, translating into a reduction in the rental rate.
At Windsor, we develop Build-to-Suit projects for IT Parks, Office Spaces, Warehouses,
Data Centres and Industrial ( Factories) Projects.
Windsor has developed & sold over 6,00,000 Sq Ft BTS projects since 2009.
We have developed BTS projects for Naukri.com, Tata Power, Paytm, Tata McGraw Hill, Mehani Exports, LG etc.
