Companies unable to find warehouse space that would meet their requirements are sooner or later going to consider building a build-to-suit warehouse. Joanna Choromańska, a JLL expert, answers the most frequently asked questions about these tailor-made facilities.
Warehousefinder.pl: If a client cannot find warehouse space that would meet their expectations on the market, what can they do about it?
Joanna Choromańska, Business Development BTS Manager: In most cases, there is only one answer. If there is no space that would satisfy the company’s requirements, the best option is to build a facility that would be constructed in order to meet the required specification: a BTS warehouse.
What kind of tenants will find this solution the most attractive?
BTS spaces are the best solution for entrepreneurs who have specific requirements due to the nature of their business. They also work well in locations where the supply of industrial space is low. It is often a response to the needs of manufacturing businesses that do not want to engage their working capital and prefer to be able to quickly and cheaply exit the market. Tailor-made facilities are also an excellent choice for companies looking for a very large space.
What possibilities come with a BTS facility?
A build-to-suit facility is a warehouse property designed and constructed for a specific tenant. This system allows the client to specify the exact requirements and needs related to the size of the warehouse, its technical specification, additional equipment and many other parameters. The tenant can freely arrange the warehouse modules, so the end result is in line with their expectations. It should be also noted that BTS allows for flexibility in terms of the size industrial space, as it is dependent solely on the client’s operational needs. Another flexible point is the type of cooperation – the available options include a tenancy agreement as well as constructing a facility with the intention of selling it to the client.
What are the additional advantages of BTS developments?
A build-to-suit warehouse allows for efficient management of the available space, maximising the use of storage space, optimising the manufacturing process and taking advantage of all the technical solutions available in the warehouse. Additionally, as the warehouse is constructed with the specific needs of the tenant in mind, all solutions can be individually tailored to the type of the tenant’s business.
Another major advantage of build-to-suit solutions is being able to choose a convenient location. Facilities of this type are most often built in locations chosen by tenants, as the developer may be able to purchase a specific plot. Alternatively, the tenant can choose an investment plot available in the developer’s offer. A convenient location is a huge upside for the tenant, and thus often the key argument for choosing a BTS development.
What if the preferred location cannot be found in the developer’s land portfolio?
I have already mentioned that the developer may be able to purchase the plot: this is what happens when the particular investment land is not part of its offer. Naturally, the developer must check whether the land is for sale in the first place, as well as if it is possible to construct the facility there.
What is the minimum lease term for BTS buildings?
In this case the usual period of the lease contract is about 10 years. Additionally, these facilities must be of adequate size, with a surface area of at least 8,000 to 10,000 sqm. Moreover, it is worth noting that more complex buildings in non-standard locations are going to have a longer lease term.
And what is the reason?
This is how developers compensate for the risk associated with a non-standard investment. To put it another way: in locations where the developer has to bear the costs of the investment and the demand for industrial and warehouse space is relatively low, the development has to bring profit during the tenant’s lease term. Additionally, when building a dedicated facility, the developer cannot be certain that it will be possible to quickly find new tenants for the space. This is why rental rates in locations that are less popular among developers tend to be higher than in the case of standard warehouses.
How long can it take to develop a build-to suit property?
This depends, among other things, on the location where the facility is to be located. If the client decides to build the warehouse in a location suggested by the developer, the development may take several months. However, if the client chooses to build in another convenient location, the development period is usually longer. Let us remember that in such a case, the developer needs more time to purchase the land and prepare it for the investment project, whose implementation may take up to 18 months.
Business Development BTS Manager
+48 664 026 254
- Special Economic Zone in Poland