Build To Suit Industrial Property

Overview of build-to-suit industrial property, including factory design, lease or purchase structures, process, benefits, risks and due diligence.

Build To Suit Industrial Property

Build To Suit (BTS) is an industrial property arrangement where a factory, warehouse or logistics facility is designed and built based on the specific operational requirements of an occupier. Instead of adapting an existing building, the developer or landowner builds a facility around the user's process flow, size, loading, power, utility, compliance and expansion needs.

Build To Suit Overview

When Build To Suit Makes Sense

• The required factory size, height, loading or layout is not available in the existing market.
• The user needs special power capacity, gas, water, wastewater, cleanroom, cold room, crane or fire safety requirements.
• The operation needs efficient goods flow from receiving to production, storage, packing and dispatch.
• The company has long-term demand and can commit to a longer lease or ownership plan.
• The location is strategic but existing buildings nearby are unsuitable.

Typical Build To Suit Process

• Requirement study: Define land size, built-up area, process flow, utilities, compliance and future expansion.
• Site selection: Identify suitable land or industrial park with correct zoning, access and infrastructure.
• Commercial term sheet: Agree lease, purchase, rental, tenure, delivery timeline, specifications and responsibilities.
• Design and authority submission: Prepare layout, building plans, fire, utilities, environmental and local authority submissions.
• Construction: Build according to agreed specifications, milestone programme and quality controls.
• Testing and handover: Complete inspections, utilities, CCC, equipment coordination and handover for fit-out or operation.

Key Specifications to Define Early

• Land size, built-up area, production area, warehouse area and office area.
• Clear height, column spacing, floor loading and slab specification.
• Loading bays, dock levelers, container yard, truck circulation and parking.
• Power capacity, voltage, backup power, solar readiness and transformer location.
• Water demand, wastewater, sewerage, drainage and flood mitigation.
• Fire protection system, hydrants, sprinkler, compartmentation and fire authority requirements.
• Gas, compressed air, chilled water, cleanroom, cold room, crane or other process-specific systems.
• Expansion land, future mezzanine, future production lines and automation readiness.

Commercial Structures

• Long-term lease: Developer builds and leases the facility to the occupier for an agreed term.
• Forward purchase: Buyer commits to purchase the completed facility based on agreed specifications.
• Owner-occupier: The company buys land and develops its own facility.
• Sale and leaseback: An owner sells the property to an investor and leases it back for operation.
• Hybrid model: Developer provides base building while occupier funds specialised fit-out or equipment.

Benefits

• Facility can be designed around actual operation instead of forcing operations into an unsuitable building.
• Better efficiency in material flow, loading, storage and production layout.
• Potentially lower long-term modification cost compared with major retrofitting.
• Can include future expansion and automation requirements from the start.
• Improves compliance planning for fire safety, utilities, environmental requirements and authority approvals.

Risks and Points to Watch

• Longer delivery timeline compared with ready-built factories.
• Higher commitment, often requiring long lease terms, deposits, guarantees or purchase commitment.
• Specification changes after design approval can cause delay and extra cost.
• Authority approvals, utilities upgrades or infrastructure constraints can affect handover date.
• If operations change, a highly customised building may be less flexible for future use.
• Disputes can arise if specifications, handover condition, defects liability and responsibility split are unclear.

Practical Due Diligence Checklist

• Confirm land zoning, title conditions, tenure, access and infrastructure readiness.
• Define specifications in writing, including drawings, power, water, loading, fire and floor loading requirements.
• Agree who pays for authority submissions, utility upgrades, infrastructure works and specialised fit-out.
• Set clear milestone dates, delay consequences, handover standards and defect rectification process.
• Check whether the developer has track record, funding capacity and technical team experience.
• Review exit options, renewal rights, expansion rights, reinstatement obligations and rent review mechanism.