{"id":1004462956,"date":"2020-08-05T14:47:51","date_gmt":"2020-08-05T22:47:51","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004462956"},"modified":"2020-08-19T06:29:21","modified_gmt":"2020-08-19T14:29:21","slug":"build-to-suits-a-safe-bet-for-developers-investors","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/build-to-suits-a-safe-bet-for-developers-investors\/","title":{"rendered":"Build-to-Suits: A Safe Bet for Developers, Investors"},"content":{"rendered":"
\"Camp<\/a>

Camp Creek 4850 is a 210,180-square-foot distribution center for Porsche Cars North America in Atlanta, developed by Duke Realty Corp. Photo courtesy of Duke Realty Corp.<\/em><\/p><\/div>\n

While industrial developers hit the brakes on speculative construction during the height of the COVID-19 crisis this spring, plans for build-to-suit projects progressed. Duke Realty Corp.<\/a> was among the major players that continued with several BTS developments.<\/p>\n

One of those projects is on Duke-owned land near interstates 81 and 78 in Pennsylvania\u2019s Lehigh Valley\u2014a 615,600-square-foot build-to-suit warehouse<\/a> for wholesale tire distributor Max Finkelstein Inc. Located at Central Logistics Park 100 in Myerstown, Pa., the building includes 7,000 square feet of office space, and features 45-foot clear heights, a state-of-the-art fire protection system and LED lighting.<\/p>\n

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READ ALSO: CBRE Capital Markets to Act as Agent for Duke\u2019s $800M Industrial JV<\/a><\/p>\n

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The project was completed during the pandemic and delivered in June, before the end of the second quarter, according to Steven Schnur, Duke\u2019s executive vice president & COO, who noted that Max Finkelstein was a new client that had also been considering speculative sites.<\/p>\n

READ THE MIDYEAR UPDATE<\/a><\/p>\n

\u201cUltimately they saw an advantage in getting their own building designed how they wanted and still being able to meet their timing,\u201d<\/em> Schnur said.<\/p>\n

Other Duke BTS developments slated for delivery before the end of the third quarter include Camp Creek 4850 in Atlanta, and Steel Run Logistics Center, a  1.3 million-square-foot center for Home Depot in Perth Amboy, N.J.<\/p>\n

\"\"<\/a>

Steel Run Logistics Center is a two-building redevelopment for Home Depot in Perth Amboy, N.J., developed by Duke Realty Corp. Photo courtesy of Duke Realty Corp.<\/em><\/p><\/div>\n

Pennsylvania\u2019s Lehigh Valley, Northern New Jersey and Atlanta are among the high-barrier-to-entry markets where Duke owns land. \u201cWe\u2019ll continue to be active in build-to-suit in all 20 of the markets we\u2019re in,\u201d<\/em> Schnur said.<\/p>\n

Cost-effective alternative<\/h2>\n

Increased specialization is also driving the BTS move for many industrial tenants, explained James Koman, the CEO of ElmTree Funds, a real estate private equity firm that manages capital for institutional and private investors and is active in the industrial BTS sector.<\/p>\n

\u201cIt\u2019s cheaper if you have the time to do the build-to-suit rather than jump into spec space and have to shoehorn to make it work,\u201d<\/em> said Koman.<\/p>\n

BTS industrial assets are highly sought after by institutional investors. \u201cIt\u2019s relatively new construction, reduced risk, increased cash flow and minimum cash outlay for capital expenses and tenant improvement allowances,\u201d<\/em> said Koman.<\/p>\n

Tenant Risk Assessment, a commercial real estate consulting firm, has worked on several BTS deals since March. \u201cYou have very good insight into the type of credit you are getting,\u201d<\/em> said CEO & Principal Bradley Tisdahl, who compares a BTS to a sale-leaseback, because it\u2019s easier to turn those deals into a bond.<\/p>\n

\"Central<\/a>

Central Logistics Park 100 is a state-of-the-art warehouse facility for Max Finkelstein Inc., near Pennsylvania\u2019s Lehigh Valley. The Myerstown, Pa., property also features 7,000 square feet of office space. Photo courtesy of Duke Realty Corp.<\/em><\/p><\/div>\n

\u201cRaising the capital, whether debt or equity, into a project is much easier when you have a credit tenant in that respect,\u201d<\/em> Tisdahl said. \u201cIt\u2019s also a very good way for a real estate company to mitigate some of the risk, and to offset some of the pressure for them to find a build-to-suit. They will be there for the long haul.\u201d<\/em><\/p>\n

Tisdahl said the build-to-suit deals he has seen in recent months have been in the energy and health-care and biotech sectors. Health-care and biotech deals have been active in the Boston\/Cambridge market in Massachusetts and San Diego, Calif., while the energy-sector deals were taking place in Texas, Oklahoma and Denver. Koman also highlighted medical and health care suppliers, as well as home improvement, e-commerce and third-party logistics companies as those seeking BTS properties.<\/p>\n

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Sector Insights rotates among office\/medical office, industrial, retail, multifamily, self storage and hotel\/hospitality.<\/em><\/p>\n

You\u2019ll find more on this topic in the CPE-MHN 2020 Midyear Update.<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

While industrial developers hit the brakes on speculative construction during the height of the COVID-19 crisis, plans for build-to-suit projects progressed.<\/p>\n","protected":false},"author":1068,"featured_media":1004462962,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1521,21748],"tags":[33010,35789,36421],"class_list":["post-1004462956","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital","category-industrial","tag-duke-realty-corporation","tag-elmtree-funds","tag-steven-schnur"],"acf":[],"yoast_head":"\nBuild-to-Suits: A Safe Bet for Developers, Investors - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/build-to-suits-a-safe-bet-for-developers-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Build-to-Suits: A Safe Bet for Developers, Investors\" \/>\n<meta property=\"og:description\" content=\"While industrial developers hit the brakes on speculative construction during the height of the COVID-19 crisis, plans for build-to-suit projects progressed.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/build-to-suits-a-safe-bet-for-developers-investors\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2020-08-05T22:47:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-08-19T14:29:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2020\/07\/Industrial-Camp_Creek_4850-Porsche_Cars_Rendering.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"750\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gail Kalinoski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/build-to-suits-a-safe-bet-for-developers-investors\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/build-to-suits-a-safe-bet-for-developers-investors\/\",\"name\":\"Build-to-Suits: A Safe Bet for Developers, Investors - 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