Underwriting
Build-to-Suit Development
Build-to-suit (BTS) describes a project organized around an identified occupier's facility requirements. Record the actual work scope, commitment, occupancy/ownership arrangement and role sequence. Lease-specific checks apply only where a lease exists. The label alone does not identify who previously owned the site, who supplies capital, whether an asset is sold by the occupier, or how any lease allocates expenses.
Also known as: BTS, BTS Economics, Build-to-Suit, Build-to-Suit Economics
Updated
Curator classification reviewed October 15, 2026: this page owns the general BTS classification and diligence framework. Use Industrial Development Underwriting for the industrial application and Sale-Leaseback and NNN Structures for an asset sale with continuing use or a lease's expense allocation. These dimensions can overlap. The framework is not a legal, tax or accounting recognition determination and supplies no universal lease term, rent premium, pre-leasing threshold or financing approval rule.
Separate the Classification Questions
| Question | Evidence to identify |
|---|---|
| Is delivery organized for an identified occupier? | actual facility requirements, work scope, agreement, conditions and milestones |
| Is there a sale-leaseback? | prior owner, asset/property interest transferred, buyer, continuing occupier and actual lease; use Sale-Leaseback and NNN Structures |
| What does the lease allocate? | actual operating, capital, structural and other obligations, exclusions and payment dates; use CRE Lease Structures and Expense Recovery |
| What investment does the capital provider hold? | direct property ownership, equity/JV interest, loan or another stated instrument, with its separate rights and obligations |
Do not infer one answer from another label. A signed lease, investment-grade parent or announced development does not by itself verify the actual obligor's payments, construction funding, completed delivery or rent commencement.
Role and Milestone Diligence
Identify the prior land/property owner, site controller, developer, occupier, rent obligor, guarantor and funding parties. Map who must acquire rights, approve designs, pay eligible costs, absorb overruns, complete work, accept delivery and start rent. Separate binding commitments from conditions, options and announcements. Verify the actual documents and effective dates rather than treating a broker or developer description as their substitute.
For leased delivery, keep lease signature, approvals, construction start, completion, tenant acceptance, rent commencement and collection as separate events. Other occupancy/ownership arrangements need their actual acceptance, transfer and payment milestones. A delay or failure can affect each party differently. Use Tenant Credit Analysis Framework for applicable collection scenarios and actual support instruments.
Bounded developer example: Source: Karis RJW Logistics Build-to-Suit at Karis Park West reports developer site ownership/preparation before the tenant requirement and subsequent lease. The retained October 1, 2026 capture supports that attributed role sequence. It is not a verified title history, complete transaction abstract or proof that no other asset transfer occurred. The source's previously recorded milestone and clear-height disagreements remain unresolved.
Hypothetical Structure Checks
These are assumed role arrangements, not observed deals or legal classifications.
- Developer-controlled site: assume a developer acquired land from an unrelated third party and now agrees to deliver a custom facility for an occupier. The assumed development is tenant-led; no sale by that occupier is included. Do not manufacture a sale-leaseback or an NNN allocation from the BTS label.
- Existing occupier-owned property: assume an occupier sells its existing facility and leases it back, with no custom development obligation. The assumed transaction has sale-leaseback features; it does not establish a BTS delivery program.
- Combined arrangement: assume an occupier transfers an asset and contracts for custom delivery with continuing use. Review the sale, work and lease separately. Both classifications may be relevant only where the actual arrangements support them.
Cash, Funding and Investor Decision
Use CRE Valuation Methodologies for included costs and CRE Return Metrics and KPIs for income/cost ratios and development-spread limits. A rate spread is not a separate cash receipt to add to rent or proof of earned profit. Reconcile actual land, construction, leasing, financing, operating and net exit cash at their stated dates.
Use Sensitivity and Scenario Analysis and Sensitivity and Scenario Analysis for complete paths and conditional funding needs. Compare on-time delivery with delay, cost changes, failed service or tenant acceptance, reduced/delayed collections and supported alternative use. Do not turn tenant commitment into a guaranteed funding balance or a uniform risk discount.
Candidate investment hypothesis: tenant-led delivery may align a facility with demand, but specialization can also require expensive work or narrow residual uses. Test both possibilities with actual commitments, costs and replacement-demand evidence. State investor objectives, price, horizon, risk tolerance, available funding and ability to execute before selecting a conclusion. Identify the evidence and conditions that could change that conclusion.
Sources and Scope
- Source: Karis RJW Logistics Build-to-Suit at Karis Park West — developer-reported pre-tenant site control and subsequent lease/work sequence only; not governing transaction documents or a universal BTS model.
The classification questions, hypothetical arrangements and decision framework are curator synthesis. Financial and lease methods remain with their linked owners. No numerical market observation, property identity, source permission or structured fact is introduced.