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Plan Ahead for Industrial Build-To-Suit

NEW YORK CITY-Large companies tend to jump more readily than smaller firms into the build-to-suit waters when contemplating new industrial facilities. Industry experts say that the ability to plan, a luxury many smaller concerns lack, keeps them in the spec end of the pool.

By Glen Thompson | Updated on September 25, 2001

NEW YORK CITY-An industrial build-to-suit property takes planning and planning takes time, which is why many small and midsize firms tend to shy away from taking the reins when it comes to developing new facilities.

Anthony Rimikis, senior vice president of development & construction at Newtown Square, PA-based REIT Brandywine Realty Trust says large companies tend to be more attractive to developers when it comes to build-to-suit industrial deals because they know what they’re doing and have cash in their pockets. “The credit issue is always premier for developers. A credit-worthy tenant makes it so much easier. A Dow or an Exxon is certainly preferable to a small company with no track record. We did a build-to-suit for International Paper where the tenant committed to half of a 100,000-sf building. That lease gave that tenant a whole other look than if we were thinking about putting up a 100,000-sf building on spec.”

Still, Rimikis doesn’t see build-to-suit as the coming wave for the industrial market. “It’s no different from office. You can have a sign on a piece of ground forever and no broker or tenant shows up. The minute the walls start going up, the people appear. All of a sudden people realize it’s a new project and they want to talk to you.”

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