Rather than purchase the land and build their own building, many companies large and small find it preferable to enter into a Build to Suit Lease.
A build to suit lease is an alternative to traditional building ownership that allows a company to design and customize a new facility to meet the enterprise’s unique space needs without the large up-front capital expenditure that comes with building and owning. In a build to suit to lease arrangement, a company selects a real estate developer to design and build a customized facility on a preferred site and then signs a long-term lease with the developer.
Under this structure, the user never has to deal with the potential pitfalls of facility ownership. This type of arrangement can be particularly attractive in foreign countries, where the company may not be as familiar with the local business landscape. Also, for most companies, real estate is not their core business and they are better off choosing to allocate their investment capital to other strategic operating initiatives that offer a higher rate of return on their investment.
A build to suit lease can offer several advantages to the company entering a new market or whose current space no longer meets their needs. It allows the company to expand the number of location choices and lead to maximum space efficiency, since the facility is designed specifically for the company. New construction allows a developer to incorporate the most recent cost-effective energy systems in the project, incorporate state of the art technology and construction materials with the goal of operating efficiency. The building can be designed to project the company’s image, attract and retain employees as well as enhance productivity and logistics. These key objectives can sometimes be challenging in varying degrees, when leasing or renovating an existing facility.
For the company desiring an office building designed specifically for their unique needs, the build to suit offers a new, customized facility without the significant capital expenditure of building and owning your office space.