A build to suit is a commercial building that a developer finances and constructs to one tenant's specifications, with the lease signed before construction starts. The developer owns the building, the tenant occupies it under a long-term lease, and the general contractor builds it to requirements that usually come from the tenant rather than the owner. That split is what makes build to suit construction different. The contractor answers to the developer on cost and schedule, but the finished building has to pass the tenant's inspection, match the brand's prototype, and open on the date the lease depends on.
How a Build to Suit Deal Works
The tenant starts with its site criteria and, for national brands, a prototype building. A developer secures the land, handles zoning and site approvals, and negotiates a lease that spells out what the developer will deliver and when. That lease usually includes a work letter or construction exhibit defining the landlord's work and any tenant's work, along with a delivery date tied to rent commencement.
Once the lease is signed, the developer hires the design team and the general contractor, finances construction, and turns the building over when the agreed scope is complete. The tenant pays for the building over time through rent instead of capital up front, which is why many franchise restaurants, retail stores, and distribution facilities are delivered this way.
Build to Suit vs. Leasing Existing Space
Leasing an existing building usually means a tenant improvement project, where the tenant takes space someone else designed and adapts the interior. A build to suit starts with bare land, so the site layout, drive-thru lanes, loading docks, structure, and utilities can all be designed around one operation. The tradeoff is time. Entitlements, design, and ground-up construction take longer than a buildout, so build to suit makes the most sense when a tenant's operation cannot fit into available space or depends on a specific site.
What the Contractor Builds: Delivery Conditions
| Delivery condition | Typically delivered by the developer's contractor | Typically left for the tenant |
|---|---|---|
| Cold or dark shell | Structure, roof, slab, exterior walls, and utilities stubbed to the building | Nearly all interior work, including HVAC distribution, restrooms, and finishes |
| Warm or vanilla shell | Shell plus HVAC, restrooms, finished and primed walls, and basic lighting | Brand finishes, fixtures, equipment, and specialty systems |
| Turnkey | A complete building to the tenant's approved plans and specifications | Furniture, inventory, and operator-supplied items |
Many franchise restaurant build to suits fall between warm shell and turnkey, with the brand's kitchen equipment and signage supplied by the tenant and installed by the contractor. Every item that crosses that line needs an owner in writing.
Where the Brand's Prototype Shapes the Build
Adapting the Prototype to the Site
National brands provide prototype drawings, and an architect of record adapts them to the specific site, local code, and utility conditions. Grade changes, stormwater requirements, and drive-thru stacking can change a prototype more than owners expect, so the contractor should price the site-adapted set, not the prototype.
Brand-Specified Equipment and Vendors
Franchisors commonly require approved vendors for signage, kitchen equipment, and technology. The lease and the construction contract both need to state who purchases each item and who installs it. A QSR build can sit idle waiting on a single piece of equipment nobody ordered.
A Schedule Tied to Rent
Because rent usually starts at delivery or opening, the construction schedule is a lease term, not just a project goal. Delivery is commonly tied to substantial completion and a certificate of occupancy, and many leases set consequences for late delivery. The schedule should be built backward from that date, with long-lead items such as switchgear, rooftop units, and kitchen hoods released early.
How Build to Suit Projects Are Delivered
Because one developer controls both the design and the construction budget, many build to suits use design-build, with the contractor involved during site adaptation so pricing and schedule are known before the delivery date goes into the lease. The tradeoffs between design-build and design-bid-build carry extra weight here, since a delay in design is a delay in rent. On larger industrial and commercial build to suits, a guaranteed maximum price gives the developer a cost ceiling to underwrite against the lease.
Let's Talk Through Your Next Ground-Up Project
Stonehenge Construction Services builds hotels, franchise restaurants, and institutional projects across Atlanta and the Southeast. Talk with our commercial contracting team about your next ground-up project.
Call 404.882.5652 today.
