For occupiers with a defined requirement
Build-to-suit: start with the requirement, then build the asset around it.
Most commercial property is built first and let afterwards. Build-to-suit, which WBI calls build-to-requirement, reverses the order: an occupier with a defined need commits to the building, and the site, design and delivery are shaped around that need.
How the model works
In a build-to-suit development, the occupier's requirement comes first. The business specifies what it needs: floor area, layout, loading, power, location and the date it must be operating. The land is then secured, the facility designed and built, and the building handed over under a lease or a purchase agreed before construction begins.
The discipline is in the requirement. It has to be written down precisely and agreed early, since everything else, from the choice of plot to the structure and services, follows from it. Specialist requirements are tested like any other, against cost, approvals and how the building could be used later.
The model suits warehouses and logistics buildings, light industrial and manufacturing facilities, showrooms, specialised buildings and workforce accommodation: any asset where the occupier knows exactly what it needs and would rather not compromise on an existing building.
How a build-to-suit project runs
Requirement
The occupier sets out what the building must do, where it needs to be, when it must be ready and the terms it is looking for. The requirement brief covers the intended use and its processes, the space and its layout, loading and vehicle movements, power, cooling and other services, and the assumptions behind them, such as growth, shift patterns and how long the occupier expects to stay.
Site
Land is identified or confirmed, and its planning position, access and utility capacity are checked against the requirement.
Design and terms
The design is developed with the occupier, and the lease or purchase terms are agreed, including the specification the building will be delivered to. The assumptions the design rests on are written down, so that any later change can be measured against them.
Delivery
Approvals are secured and the building is constructed, with the occupier kept informed and changes controlled.
Handover
The building is completed, tested and handed over, ready for the occupier's fit-out or, where agreed, ready to operate. What is handed over, and with what evidence, is agreed in the terms rather than at the end.
Agreeing what is handed over
Where the developer's work ends and the occupier's begins is set project by project. A label such as shell and core does not describe the same scope on every project, so the agreement should describe the boundary itself: which parts of the structure and building envelope, which building services and up to what point, and which fit-out the occupier carries out.
Handover evidence belongs in the same discussion as the occupier's brief, not at the end of construction. Questions worth settling early:
- Which tests and commissioning results will show that the building services work, and who witnesses them?
- Which documents, drawings and approvals are handed over with the building, and in what form?
- Where do the developer's systems stop and the occupier's fit-out begin, for power, cooling, fire protection and data?
- Who is responsible for defects, maintenance and warranties after handover, and for how long: the developer, the landowner or investor that owns the building, or the occupier?
- If the occupier's fit-out overlaps with the last stages of construction, who controls site access, safety and the programme?
What the occupier commits, and what it gains
Commitment before construction
The occupier signs a lease or purchase agreement before the building exists. That commitment is what makes the development possible.
A precise specification
Changes after the design is fixed cost time and money, so the occupier's team needs to be ready to decide when decisions are due.
A building that fits
In return, the occupier gets a building designed around its operation rather than adapted to it, in the location it needs.
Capital kept in the business
Under a lease, the occupier can use a purpose-designed building without tying up capital in land and construction.
A fixed programme
The delivery programme is agreed at the outset and built around the date the occupier needs to move in.
Terms for the long run
Lease length, options to extend or buy, and what happens to the building afterwards are all part of the agreement.
Finding the land
An occupier may already own land, may want the land found as part of the project, or may need to be inside a particular zone for licensing, customs or logistics reasons. Each changes the arrangement. On the occupier's own land, the development can be structured around a long-term right over that land; where land has to be found, its cost and timing become part of the terms.
In Abu Dhabi, economic zone operators offer the model: KEZAD, for example, designs and builds facilities to an occupier's requirement and offers them on lease or purchase terms. The same logic applies outside the zones to showrooms, specialised buildings and workforce accommodation.
When it is the wrong route
Build-to-suit is not always the answer. If the requirement is still changing, if the occupier cannot commit before construction, or if a suitable existing building is available on acceptable terms, leasing or buying existing space is usually quicker and cheaper, because land, approvals and construction all sit ahead of occupation in a build-to-suit project.
When the choice is between a warehouse or production facility built around the occupier's requirement and an existing building, the comparison is worth making line by line. An existing building that meets most of the requirement can still fail on one point that cannot be fixed, such as clear height, floor loading, power or yard space; one that falls short on several points that can be adapted may still be the better answer once time and cost are counted. The decision turns on which requirements the operation genuinely fixes, which could be met by fitting out or altering an existing building, how long the operation needs to stay, and what moving later would cost.
It works best when the requirement is clear, the operation expects to stay in its location for many years and no existing building comes close to the need. For buildings shaped by a particular operation, see specialised-use buildings. For arrangements that bring land, capital and an occupier together, see joint developments.
Have a defined requirement?
Describe the operation, the space, the location and the date you need to be operating.
Discuss a requirement