Build-to-Suit
Build-to-suit (BTS) is a commercial real estate arrangement where a developer or landlord constructs, purchases, or fully renovates a property according to a specific tenant's operational requirements, then leases it back to that tenant. The tenant provides detailed specifications; the landlord funds and manages the construction. The resulting lease is typically long-term (10–25 years) and the space is purpose-built for that use.
Updated July 13, 2026
Key Facts
- 1Build-to-suit leases typically run 10–25 years — significantly longer than standard commercial leases — to allow the developer to recoup construction costs
- 2Net lease structures (NNN) are almost universal in build-to-suit arrangements because the tenant has significant control over the building
- 3BTS projects are most common for single-tenant users: quick-service restaurants, banks, pharmacies, auto dealers, and distribution centers
How Build-to-Suit Works
In a build-to-suit transaction, the tenant identifies a site (or approves a site found by a developer), submits detailed construction specifications, and signs a lease before construction begins. The developer then secures financing, pulls permits, hires a general contractor, and delivers the finished space — often with a guaranteed completion date tied to the lease commencement.
Because the developer is taking on construction risk and long-term capital commitment, they require long lease terms and credit-worthy tenants. National chains, franchises, and large private companies with strong financials are the most common BTS tenants.
Build-to-Suit vs. Tenant Improvement Allowance
A TIA buildout means the tenant manages construction within an existing space and the landlord reimburses costs up to the agreed amount. A build-to-suit means the developer manages construction from the ground up and the tenant has no construction responsibility. BTS results in a purpose-built space with no compromises; TIA buildouts work within existing structural constraints.
BTS is more expensive for the developer to execute, which is reflected in higher net rents. For tenants who need a very specific building footprint, loading, or utility configuration, BTS is often the only option.
Frequently Asked Questions
Who pays for construction in a build-to-suit?
The developer pays for construction and recoups the investment through long-term rent. The tenant's obligation is the lease itself, not the construction costs. This is the primary benefit of BTS for tenants: no up-front capital outlay for the building.
Can a small business get a build-to-suit?
Rarely. Developers require credit-worthy tenants because they're committing significant capital based on the strength of the lease. Small businesses without strong financials or franchise backing are unlikely to qualify for a traditional BTS deal.
What happens at the end of a build-to-suit lease?
Options vary by contract: the tenant may renew, the landlord re-leases the space, or the tenant exercises a purchase option. Many BTS leases include purchase options at pre-agreed prices, which some tenants use to eventually own the real estate outright.