Yogi Berra wasn’t wrong when he said “If you don’t know where you’re going, you’ll end up someplace else.”
The same sentiment applies to your build to suit development. If you don’t have a plan, then you’re going to end up with something else (or nothing at all).
Through successful collaboration, the goal of any build to suit is to provide tenants with efficiency and customization while expanding their business. So, in getting from concept to completion, why not use a simple, efficient plan?
Here’s a concise 7-point plan for approaching a new build to suit development.
1) Assess the Market(s)
Identify how your company can best grow. Look at the overall supply and demand of the market. Do the demographic trends meet your requirements or expectations? Is there demand for particular users or a void that you can fill?
2) Determine Needs/Long-term goal
One of the things to consider with build to suit development is that the timeframes are often longer than average - both the lease and construction schedule. Before getting into a build to suit project, tenants should establish what their needs and long-term goals are to determine if a build to suit is the best fit.
3) Determine Requirements
Finalize your proposed building requirements, including:
its proposed use
required schedule for completion
proposed lease term
other special lease requirements (if any)
In some cases, a preliminary budget, providing your initial view of what the project will entail, may be included.
4) Finding the Right Developer
Taking the right steps and asking the right questions to find the right developer is the next step in your process. A tenant will usually want to assess:
relevant experience in similar projects, expertise, staffing, and references
a description of the developer’s team of experts who could be called upon to participate in the project, including architects, engineers, land planners, and attorneys
a general description of how the developer would undertake the project
5) Plan/Design Preparation
Perhaps the single most important issue to be addressed in a build to suit transaction prior to commencement of construction is the preparation of the specific building plans. This will include specifications for building components and materials, including the assignment of responsibility for portions of the plans.
6) Site Selection and Analysis
Once you’ve established your requirements and site parameters are set, you’ll move forward with the site selection and analysis stage. The examination of specific categories of information about each competing site is a crucial part of the selection process. Side by side comparisons of sites identified as viable prospects will highlight the pros and cons of each possible development site.
7) Determine Costs
Hand in hand with the review and approval of the plans is the review and ultimate approval of the budget for the job. A general contractor will provide more precise cost guidelines for building the project based on the approved plans. This relates directly to the calculation of the rental rate, as the developer/landlord will base rental rate off of those construction/development costs.
While build to suit development has many ins and outs, extensive details, and can be a complicated process, this broad overview is meant to help put a plan in place, and get your project from conception to completion.