NAI Commercial Central Vancouver Island

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Q: Why build-to-suit as a lease?

February 2, 2015

By: Louise Turch

Question:

Why would someone choose a build-to-suit lease instead of building their own?

Answer:

The option for a tenant to have a custom built building is the commercial equivalent of a custom dream home. It creates the opportunity for a building to be constructed upon mutual agreement between the Landlord and Tenant. A lot of companies do not have the initial financing to construct their own building. Most of their funds would end up concentrated into the building, rather than into their business. The Tenant has a better chance to receive a better return on their investment by directing their funds into their business in the first place, rather than the construction of a building. Another valid reason a business may choose a build-to-suit option is because some business owners may not want the hassle of managing and operating real estate, or being tied to the building if the company expands. Constructing and owning your own building is a good option for large companies with plenty of up front capital and intense borrowing power.