Why You Might Consider a Build to Suit Lease

There are essentially four options for a business owner seeking a space to operate in: leasing a vacant office space, building on a vacant lot, purchasing an existing commercial building and renovating it, or negotiate a build-to-suit lease.

The fourth option offers a unique alternative in which the business owner can customize an existing building to suit their needs without having to purchase it outright.

This can be advantageous in numerous situations, particularly when the tenant does not have the upfront capital to purchase a building. In this relationship, a developer/landlord customizes the building for the tenant, and the tenant leases it from them for a stated term.

If you are considering a build-to-suit lease in South Florida, Mark Schecter is an experienced and licensed real estate attorney who can assist you with your negotiations to ensure a favorable deal, and answer any pertinent questions that you may have about this leasing option.

Below are some of the top benefits of a build-to-suit lease to consider:

  • Design Flexibility – the tenant can design the space exactly how they wish, with very fine details included such as a branded interior design, lighting, flooring and décor.
  • Energy Efficiency – energy efficient construction can be requested and implemented in the design of the space.
  • Location Flexibility – being open to build-to-suit leases allows a company to expand its potential locations and choose the most ideal one.

Build-to-suit leases have some disadvantages

It’s important to note that build-to-suit leases are often a much longer duration than traditional commercial leases. This is due to the higher upfront investment required by the landlord and their additional risks.

Also, the credit worthiness of the tenant must be carefully evaluated by the landlord. This is to help ensure that the tenant will stay in the building for the full intended term so that the landlord can recoup their investment. Build-to-suit leases will also often have a higher monthly payment than other lease options.

Because of these disadvantages, it may seem like it is better for a tenant to purchase the building outright. However, many business owners prefer to avoiding the real estate business and would rather spend their resources on developing their core business, while still having the flexibility to customize their space as if they were an owner.

Each of the four commercial real estate space options mentioned above have their own unique benefits and disadvantages. Mark Schecter at Schecter Law is an experienced commercial South Florida real estate lawyer who can help you determine which one might be best for your business. Contact Schecter Law today at (954)-779-7009 for a consultation.