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
Building Safety Regulator appoints permanent director
And publishes three-year strategic plan.
Update on the Energy Savings Opportunity Scheme (ESOS)
Introducing changes to make it more effective from 2024.
2023 CIOB photography competition
Shortlist announced for 2023 public choice award vote.
The last of the Victorians. Book review.
Grimsby's Kasbah: where’s that?
An exotic name that is shrouded in mystery.
This weeks guest editor, Ankita Dwivedi of Firstplanit.
Fropm practice to research and the business of materials.
Terms, histories, theories and practices.
Types of work to existing buildings - repurposing of buildings
Alteration and everything else before demolition.
2023 HSE data on workplace injuries and ill health
And CIOB's response.
Building Safety Act and Secondary Legislation
Presidential update from CIAT's Eddie Weir PCIAT.
Starting pistol Statement for an election campaign?
Rates freeze, NI cuts, full expensing; early election?
Positive pressure or positive input ventilation
Could this be a remedy for condensation, damp or mould?
Unlocking a Healthier Tomorrow
Report on Social housing retrofit in Scotland 2023
Call for ministerial group and National Retrofit Delivery Plan.