Behind The Build To Suit Boom
Behind the Build-to-Suit Boom
Corporate build-to-suit projects have become a thriving strategic sector within Ryan over the past few years. Express caught up recently with Rick Collins, President of Ryan’s SouthWest Region to learn more. Is the incredible strength of this sector a function of the real estate landscape? The market timing? Ryan’s unique capabilities?
The answer, as it turns out, is all of the above.
“In most of the country we are in a recovering market,” Collins says. “There has been little new development of office space, which means fewer vacant alternatives that meet large companies’ requirements.”
Collins goes on to explain that the nature of office space itself is evolving, with many employers seeking to create more contemporary types of work environments as a way to attract Millennials. Some
buildings completed 15 or 20 years ago may no longer be considered Class “A” because they don’t have the right amenities or the right floor plans, or they don’t meet employers’ parking, HVAC or electrical power requirements.
This shortage of available office and production space combined with a desire for fully up-to-date buildings has many companies turning to build-to-suit. “With build-to-suit, customers get something that’s tailored to their requirements, and it’s typically less expensive compared to an equivalent amount of space in a multi-tenant building,” Collins says, adding that build-to-suit projects—with their long-term leases and creditworthy tenants—are also attractive to institutional investors.
Best of all, such projects are “right in Ryan’s wheelhouse,” according to Collins. “We are excellent
at executing them, we have excellent capital relationships. This is a strategic sector in which Ryan competes very effectively. A large part of that is our lifecycle approach. By providing all of the various services, from development, design, and construction to capital markets and real estate management, we can put together a very cost competitive overall solution. And working with a single-source provider like Ryan takes the headache and the risk out of the process for customers. Ryan taking full responsibility for a project provides certainty of outcome.”
Recent notable build-to-suits include the two-level, 180,000-SF Olympus Surgical Technologies America facility, which consolidates five operations into one international surgical innovation center in Brooklyn Park, MN. Ryan also recently completed Avnet’s 58,000-SF home in San Antonio, TX, a standout office designed to reflect the firm’s success and values. Shutterfly’s 217,337-SF facility in Shakopee, MN, is designed to better serve Midwestern customers. And of course there is the two-million-SF Marina Heights project in Tempe, AZ, as well as the recently-inked 120,000-SF headquarters deal with Kum & Go in Des Moines, IA. “Some corporations, especially those that have a long term lease or own a building—will choose to completely reconfigure that building, often on a phased basis, so that business can continue uninterrupted; this, too is a type of build-to-suit,” Collins points out. “We’ve done that for Principal Financial, for the Bishop Henry Whipple Federal Building, and others.”
“Though we will start seeing new multi-tenant development as the markets improve, I expect a continued appetite for build-to-suit projects as the economy continues to heat up and companies continue to expand,” adds Collins.