Contract Law
Definition
A lease agreement where a property is constructed or modified to meet the specific needs of a tenant.
Built-to-Suit (BTS) is a specialized lease agreement in industrial real estate whereby a developer or landlord constructs or modifies a property exclusively tailored to meet the precise operational, spatial, and logistical requirements of a single tenant. This approach involves the selection or acquisition of land, financing, design, and construction phases fully aligned with the tenant’s specifications, ensuring optimized workflow, regulatory compliance, and future scalability. BTS contracts benefit both parties by enabling tenants to bypass the constraints of generic industrial spaces and secure facilities that directly support their business processes, while developers gain long-term lease commitments typically spanning 10 years or more. In the current industrial real estate market cycle, characterized by fluctuating demand and increasing logistic complexities, BTS developments are particularly strategic. They provide tenants with a competitive edge through customized infrastructure, and developers with stable, value-driven investments. Furthermore, BTS projects foster strong landlord-tenant partnerships by integrating design flexibility and sustainable building practices. This model mitigates the risks of obsolete facilities and enables adaptive reuse over the lease term, aligning with evolving market dynamics and tenant growth trajectories.
Practical Example: IPEC Group
IPEC Group exemplifies the built-to-suit model through recent projects in Slovakia and the wider CEE region. For instance, IPEC partnered with a major e-commerce logistics operator requiring a state-of-the-art warehouse customized to handle a high volume of automated sorting and last-mile delivery operations. IPEC acquired the suitable land, collaborated closely with the tenant to design tailored racking systems and energy-efficient lighting, and constructed the facility within a strict timeline. This BTS project not only met the tenant’s complex operational needs but also ensured long-term occupancy under favorable lease terms, reinforcing IPEC’s reputation as a developer capable of delivering bespoke industrial real estate solutions that drive tenant success and regional economic growth.
Related Terms
Lease Agreement, Custom Industrial Facility, Tenant Improvements, Ground Lease, Long-term Lease