What are Build to Suit Facilities?
Build to suit (BTS) facilities are industrial properties that are tailor-made for the needs and wants of a specific tenant. For this type of facility, a tenant must come to an agreement with a developer or landowner in constructing a new, custom-built property for lease. The two main ways to obtain a BTS facility are through a developer or a sale leaseback. They are a popular preference as industrial transaction activity rises and property availability dwindles.
Why Companies are Choosing BTS
While expensive, BTS facilities are a long-term solution for tenants looking to maximize space and efficiency, grow and scale their business, and optimize distribution and warehousing. These facilities cater to the sole occupier, giving no incentive for the tenant to vacate the space after their lease is up. Additionally, with many companies bringing manufacturing back to the United States, there are minimal options to house the on-shore operations.
Companies Chasing BTS Facilities
It comes as no surprise that e-commerce giant Amazon is at the forefront of leasing build to suit facilities throughout the nation. Amazon has leased millions of industrial warehouses in the last two years. Its activity elevated industrial property values by 39 percent between October 2020 and October 2021. The company spent an estimated $5.8 billion on build to suit developments for fulfillment centers in 2021.
Steam Realty Partners, a Dallas-based development firm, has embarked on a 3.4 million square foot industrial campus in Dallas-Fort Worth (DFW), TX, with several build to suit options and expandable buildings to accommodate various tenants. The massive development is to provide much-needed industrial space to DFW for logistics and distribution purposes.
