Development & Lease Back

Build to Suit to Lease

Build-to-suit-to-lease is a model that allows the user/tenant to design and customize a new facility to meet his or her unique needs in an accelerated timeline without the large capital expenditure that comes with building and owning. This is the opposite of a sale-leaseback arrangement, in which a business agrees to sell its facility to an investor and then lease the facility back.

In a build-to-suit-to-lease agreement, a business works with a developer to design and build a customized facility and then leases it from the developer. Under this structure, the business never owns the facility. As a result, capital dollars can be directed to other non-facility-related areas to grow the business while strengthening the balance sheet since most lease arrangements are treated as operating leases and not capital leases. The end result is a new, customized facility with a very low expenditure of capital by the user. Many well-capitalized developers offer this as an alternative to the typical build-to-own and lease options.

For business owners, a build-to-suit-to-lease arrangement permits the firm to move into a new, customized facility much faster than if they built independently. It also permits the firm to keep its focus on growth without the myriad distractions, time commitment, and capital drain that a build-to-own decision entails. A build-to-suit-to-lease scenario also yields a customized facility designed to enhance the company's image, productivity, and logistics. These critical factors are often compromised, to varying degrees, when leasing an existing facility.