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What is a Built-To-Suit Warehouse? Everything you need to know

Posted by Paul Poh on September 17, 2022

A built-to-suit warehouse is a type of warehouse wherein there is an agreement between the lessor (developer) and the lessee (client) and the warehouse space is customized according to the client’s requirements by the developer. The developer shares all the design and construction requirements at the outset, which when agreed upon, the actual warehouse construction commences.

Advantages of Built to Suit(BTS) Warehouse

  1. Choice of convenient location and investment to tenant.
  2. Cooperation with a dedicated BTS team.
  3. Savings in terms of investment and operating costs to tenant.
  4. Consulting in the scope of optimizing logistic processes.
  5. Solutions adjusted to the client’s industry profile.
  6. The design of the building will be tailored to the exact needs of the tenant with existing needs and future growth options in mind.
  7. The developer or land owner is assured of tenancy even before the construction and this gives him confidence and financial security.
  8. Project time frame as per client need
  9. Rentals start from day 1 which is an ideal scenario for a real estate investor.

Disadvantages of Built To Suit Warehouse

  1. Warehouse is specifically made as per client requirement so developer will find difficulty in future to find another tenant easily.
  2. The overall timeframe of a BTS can reach out as far as 15-24 months, or longer in some cases, and market conditions changes rapidly.
  3. Tenants may view long-term lease deals as a drawback if adequate growth and contraction options aren’t available.
  4. New construction is expensive. BTS construction is no exception; you just pay for it in a higher lease rate.

Why companies choose built to suit warehouse ?

At present, businesses do not want to engage capital in buying a plot and constructing a warehouse and decide to utilize BTS in order to economize on the investment and future maintenance costs. In the BTS model companies get construction specifications as per their own requirement so this is the biggest advantage.

Who are the Major clients for BTS Warehouse?

  1. E commerce companies
  2. 3PL companies
  3. Logistic companies
  4. Manufacturers

How can you arrange funds for BTS Warehouse ?

There will always be a minimal amount of funding required for the project to be executed and the same needs to be available as liquid funds – about 15 to 25% of the construction cost to enable approvals, sanctions, site pre-development expenses, and foundation.

Once the LoI(Letter of Intent) or lease agreement is signed with a tenant with a lock-in and a received security advance, financial institutions and the bank will be comfortable to fund the balance money needed to cover the complete expenses. The land will be needed to be offered as security towards such loans and advances.

What is the design process for built-to-suit warehouses?

The design process for BTS warehouses depends on the tenant’s industry and needs. If the tenant requires few or no custom amenities, a basic design and execution can happen rather quickly.

Because each industry and company is unique, a tenant might need additional resources in its warehouse space. The following components affect the design timeline:

  • Office space requirements
  • Specialized racking configurations
  • Space for packaging, processing, light assembly and kitting
  • Docking space for shipping and receiving
  • Industry-specific amenities, such as cold storage facilities or hazmat areas
  • Automated warehouse solutions

What are the advantages of using a developer for a built-to-suit warehouse?

BTS warehouses allow tenants to rely on the expertise of the developer, who will find the perfect building for the tenant to conduct their business efficiently. Many tenants search for BTS warehousing to ease their long-term financial burden. An experienced developer who specializes in industrial real estate can find, construct, and customize the best property for the tenant at the best price.

Hiring a developer to design and build a BTS warehouse also benefits the property owners, who should be looking for developers with track records of on-time project delivery, solid construction, and strong maintenance and operations performance as landlords. Developers specialize in the best ways to construct or renovate a building—including the most current technology. They can create a state-of-the-art, and even future-proof, warehouse to earn rent for the landlords for years. Logistics park operators who build BTS warehouses already have title to the land inside their parks and have constructed or installed critical infrastructure – walls, roads, drainage, waste collection and recycling, security, power connections, water hookups, IT infrastructure, open-yard and laydown storage, vehicle maintenance and refueling areas, and more.

Rely on the experts for your built-to-suit warehouse project

Built-to-suit warehousing can greatly improve a tenant’s overall operations. Designing a warehouse as part of a BTS lease agreement should include cost-efficient and state-of-the-art office and warehouse equipment that benefit both the tenant and the landlord. Industrial Space Team specializes in helping companies throughout industrial supply chains become smarter, faster, and more efficient. Visit our website to learn about our logistics parks, e-commerce logistics, and facilities management.

Build your own warehouse facilities for your growing business, contact our sales team

Kamila Rajan

+6019 251 2233

Paul Poh

+6012 9797 993

Michael Liew

+6017 842 9828

Harum Delima

+6012 601 7002

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