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Is a build-to-suit lease the right solution for your clients?

On Behalf of | Feb 18, 2023 | Commercial Real Estate |

Finding the perfect property for a residential real estate client can be a challenge, but finding a perfect fit for a commercial client can sometimes seem impossible.

Homeowners can compromise on their location or on certain amenities, but businesses often have certain standards they absolutely have to meet. From their placement relative to other properties nearby to the zoning of the land, sometimes compromises can’t be made. Even the specific layout of the facilities and the equipment installed in the building can influence how appropriate a space is for a business tenant.

In recent years, developers have started to prioritize offering build-to-suit leases. Could a build-to-suit leases be the right solution for your challenging commercial clients?

Build-to-suit arrangements can meet all of their needs

For those with sufficient capital or credit, a build-to-suit lease may be an ideal solution. It can result in brand-new, customized facilities that can integrate every practical and aesthetic consideration your client brings to the table. They can demand high ceilings, specialized equipment or unique finishing touches for the spaces where clients or customers will visit.

The only real limitations are the timeline and the budget. Of course, there are drawbacks to build-to-suit leases. Taking this approach will mean saddling the company with a substantial debt load, and it may lead to relatively high operating costs in many cases. An organization will pay a premium for bespoke facilities. There can also be a lengthy delay, as building a new space takes longer than retrofitting an existing one in many cases.

However, businesses that already have a proven track record of success or sufficient capital may view the benefits of having brand-new, custom-built facilities as far more important than potential drawbacks.

Contracts will require careful review

Tiny oversights on your part when reviewing a build-to-suit lease could end up causing major headaches for you and/or your clients in the future. Especially when you have not had much experience in drafting and negotiating such contracts, you may want to bring in secondary support to ensure that you adequately protect your own interests and those of your clients.

Getting professional help for the unique challenges involved in a commercial real estate transaction benefits professionals representing those hoping to acquire commercial property, so don’t treat this opportunity lightly.