A build-to-suit (BTS) arrangement is a development structure in which a landlord or developer constructs a building to a specific tenant's exact specifications — clear height, dock count, office layout, power capacity — with the tenant pre-committing to a long-term lease before construction begins. BTS is the standard path for tenants whose operational requirements can't be met by existing speculative inventory in the market.
How the build-to-suit process typically unfolds
| Phase | Typical duration |
|---|---|
| Site selection & LOI negotiation | 2–4 months |
| Design & entitlement (permitting) | 3–6 months |
| Lease execution | Concurrent with design finalization |
| Construction | 8–14 months depending on size/complexity |
| Total timeline (site selection to move-in) | 14–24 months |
Why tenants pursue build-to-suit
BTS is the right path when a tenant's specifications — unusual clear height, extensive power requirements, specialized racking, or a specific site location — simply don't exist in available speculative inventory. It also gives tenants direct input into design decisions that would be fixed and unchangeable in an existing building.
The tradeoff is time and commitment: BTS requires a long lease term commitment (often 10-20 years) to justify the developer's construction investment, and the process from site selection to move-in typically takes well over a year, compared to weeks for leasing existing space.
What to watch for before committing
Lease term commitment
BTS developers typically require 10-20 year lease terms to justify construction costs — confirm this matches your business's long-term horizon.
Design specification lock-in
Finalize specifications carefully before construction begins — mid-construction changes are expensive and can delay delivery.
Delivery date guarantees
Negotiate rent abatement or penalty clauses if the developer misses the agreed delivery date, since delays directly affect your operational timeline.
Entitlement and permitting risk
Confirm the site's zoning and permitting path is realistic and understand who bears the risk if approvals take longer than expected.
Cost overrun responsibility
Clarify how unexpected construction cost increases are handled — whether they affect your rent or are absorbed entirely by the developer.
Exit and assignment rights
Negotiate sublease and assignment rights given the long lease term commitment, in case your space needs change significantly over the lease.
When you need to know this
- Specialized operational requirements — clear height, power, or layout needs that existing inventory can't meet
- Long-term facility planning — businesses with a stable, long-term operational horizon that justifies a multi-year commitment
- Specific site or location needs — securing a precise location not available among current listings
- Large-scale distribution or manufacturing buildouts — projects large enough to justify dedicated ground-up construction
Frequently asked questions
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