Built to suit
Built-to-suit is a property term that describes a scenario in which a developer (or building owner) provides a building that is built (or refurbished) to a tenant’s exact specification. The developer finances the project and is responsible for its design, construction and completion. The developer retains ownership once the land and the building(s) are leased to the tenant.
Built-to-suit properties can range from single units to multi-building facilities. Agreements are usually made between the developer and a single tenant, although more than one tenant may be involved.
According to Savvas Kotsopoulos of law firm Miller Thomson, the arrangement between developer and tenant essentially comprises two agreements:
- A development or construction agreement, the result of a request for proposal (RFP) process, which defines the relationship between the landlord and tenant from the design through construction of the building, and
- A lease agreement which stipulates the terms of the occupancy post-construction. In some cases, the provisions regarding the construction of the building are included in the lease itself or captured in an accompanying ‘work letter’.
The construction aspect of this arrangement is usually the key issue and the most complicated, warranting close attention to the landlord’s and the tenant’s responsibilities in this regard.
Build-to-suit agreements can be highly complex, as they must encompass issues of design, construction, timing and financing and so they must be drafted carefully.
[edit] Further information
For more detailed information, see ‘Laying the Foundation for a Build-to-Suit Lease’, by Savvas Kotsopoulos of Miller Thomson. https://www.millerthomson.com/en/publications/communiques-and-updates/leasing-times/december-3-2012/laying-the-foundation-for-a-build-to-suit/
[edit] Related articles on Designing Buildings Wiki
- Break clauses in leases.
- Build to rent.
- Development appraisal.
- Feasibility studies for construction projects.
- Funding options.
- Funding prospectus.
- Ground rent.
- Housebuilder.
- Landlord and Tenant Act.
- Lease Negotiations - Tenants Checklist.
- Leasehold.
- Overbuild.
- Property development finance.
- Rent to buy.
- Speculative construction.
- Statutory declaration excluding security of tenure.
- Types of development.
- Vacant possession.
Featured articles and news
Costs and insolvencies mount for SMEs, despite growth
Construction sector under insolvency and wage bill pressure in part linked to National Insurance, says report.
The place for vitrified clay pipes in modern infrastructure
Why vitrified clay pipes are reclaiming their role in built projects.
Research by construction PR consultancy LMC published.
Roles and responsibilities of domestic clients
ACA Safety in Construction guide for domestic clients.
Fire door compliance in UK commercial buildings
Architect and manufacturer gives their low down.
Plumbing and heating for sustainability in new properties
Technical Engineer runs through changes in regulations, innovations in materials, and product systems.
Awareness of the Carbon Border Adjustment Mechanism
What CBAM is and what to do about it.
The new towns and strategic environmental assessments
12 locations of the New Towns Taskforce reduced to 7 within the new towns draft programme and open consultation.
Buildings that changed the future of architecture. Book review.
The Sustainability Pathfinder© Handbook
Built environment agency launches free Pathfinder© tool to help businesses progress sustainability strategies.
Government outcome to the late payment consultation, ECA reacts.
IHBC 2025 Gus Astley Student Award winners
Work on the role of hewing in UK historic conservation a win for Jack Parker of Oxford Brookes University.
Future Homes Building Standards and plug-in solar
Parts F and L amendments, the availability of solar panels and industry responses.
How later living housing can help solve the housing crisis
Unlocking homes, unlocking lives.
Preparing safety case reports for HRBs under the BSA
A new practical guide to preparing structural inputs for safety cases and safety case reports published by IStructE.
Male construction workers and prostate cancer
CIOB and Prostate Cancer UK encourage awareness of prostate cancer risks, and what to do about it.