Why Build-to-Suits Are Gaining Momentum in Today’s Market
Companies are turning to custom-built real estate to meet their evolving needs
As companies navigate an increasingly complex operating environment, one theme is becoming clear across the industrial and logistics sectors: flexibility and tailored real estate matter more than ever. Against this backdrop, build-to-suit development is gaining renewed momentum—emerging as a strategic solution for occupiers seeking custom real estate that aligns with their business needs.
A Market Defined by Constraints and Opportunity
Today’s market conditions are creating a natural tailwind for build-to-suit projects. In many logistics hubs, available space is limited, while demand for high-quality, well-located facilities remains strong. At the same time, elevated construction costs and shifting supply chains have slowed speculative development, further limiting available real estate.
For occupiers, existing real estate often falls short of increasingly complex operational requirements. Whether driven by automation, inventory optimization or last-mile delivery needs, companies are prioritizing facilities that are tailored to their business from day one.
Build-to-suits bridge this gap—offering a direct path to purpose-built space in markets where alternatives are limited.
The Shift to Purpose-Built Real Estate
The increase in demand for build-to-suits reflects a broader evolution in how companies view real estate. Rather than adapting operations to fit an existing building, occupiers are increasingly designing space around their workflows, equipment and long-term growth plans.
A build-to-suit is fundamentally a partnership model: a developer or capital provider funds and delivers a custom facility aligned with a company’s specifications, with the company entering into a long-term lease upon completion.
This approach has several key advantages:
- Customization: Facilities are custom-built for the tenant’s needs and designed to optimize layout from the outset
- Capital efficiency: Companies can preserve capital for core operations rather than investing in real estate
- Operational control: Tenants maintain operational control of the real estate
- Scalability: Properties can be designed with future expansion, sustainability improvements or evolving requirements in mind
In a market where efficiency and resilience are paramount, these benefits are becoming increasingly compelling.
Aligning Real Estate with Supply Chain Strategy
One of the most significant drivers behind the growth of build-to-suits is the transformation of global supply chains. Companies are rethinking their networks to improve resilience and proximity to end customers, placing greater importance on the role of real estate within their broader strategy.
As a result, modern logistics facilities are no longer just warehouses; they are highly specialized hubs incorporating automation, advanced power requirements, specialized layouts, sustainable features, and strategic proximity to population centers and key transportation routes.
As these requirements become more complex, custom build-to-suit development is increasingly the most effective—and sometimes only—option.
Momentum That’s Here to Stay
What began as a niche solution for highly specialized occupiers is becoming a mainstream approach across industries. From e-commerce and third-party logistics providers to manufacturers and retailers, a growing range of companies are turning to build-to-suits to meet their evolving real estate needs.
At W. P. Carey, we see this trend as a reflection of how occupiers increasingly value partnership. Through our Carey Tenant Solutions platform, we work alongside tenants to design, fund and deliver tailored real estate solutions that align with their operational goals. By combining deep expertise with a partnership-driven approach, we help companies turn real estate into a strategic advantage—built for today’s needs and adaptable for the future.
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The Ins and Outs of Build-to-Suits
What is a build-to-suit? A build-to-suit is a real estate solution where a company secures a custom-built facility without the upfront capital investment. In a build-to-suit, a developer or investor funds and manages the construction of a new facility or expansion of an existing one to meet the specifications of a prospective or existing tenant. Upon completion, the company enters into a long-term lease, similar to a sale-leaseback. For companies in need of a new, purpose-built facility, a build-to-suit is an efficient and capital-saving alternative to buying or retrofitting an existing building. What are the key benefits of a build-to-suit? Custom-built facility in the company’s preferred location No upfront capital required, enabling the company to preserve capital for business growth Operational control of the facility post construction Potential for future expansions, renovations or energy retrofits through an investor partnership Who should consider a build-to-suit? Build-to-suits are best suited for companies that: Have specialized layouts, equipment or other design requirements Prefer a new property instead of retrofitting an older building Want to preserve capital rather than tie up funds in real estate development Can commit to a long-term lease (typically 10-30 years) How does the build-to-suit process work? Companies can pursue a build-to-suit through three main approaches: Developer-led build-to-suit: Based on the building specifications, a tenant will hire a commercial developer. The developer will take on the responsibilities (and risk) of land acquisition and building construction. Often, they will work with an investor, like W. P. Carey, as a capital partner to either finance the construction or acquire the building upon completion. The tenant will then lease the property, typically on a long-term basis, from the owner. Reverse build-to-suit / sale-leaseback: In this scenario, the tenant takes on the initial responsibilities of land acquisition, financing and hiring a general contractor for construction. Upon completion, an investor like W. P. Carey acquires the building. This allows the tenant to recoup the acquisition cost and reinvest that capital into their business. Investor-led build-to-suit: With this option, a tenant can bypass the developer and work directly with an investor like W. P. Carey that offers in-house project management services. The investor would work hand-in-hand with the tenant on site selection, land acquisition, design and construction, delivering a building that meets the tenant’s unique needs with no upfront capital required. The investor would own the building and lease it to the tenant on a long-term basis upon completion. How long does a build-to-suit take? Build-to-suits can take anywhere from 12-36 months depending on the size, location, permitting and other specifications. Rent payments typically do not begin until the building is substantially complete and operational. The lease term of a build-to-suit property is also usually longer than those of a typical commercial lease, ranging anywhere from 10-30 years. Conclusion: Is a build-to-suit right for your business? While build-to-suits may seem intimidating for companies who have never pursued one, they are a great solution for custom-built real estate with little to no upfront capital involved. W. P. Carey has extensive experience working with tenants and developers to structure customized build-to-suit financing programs that meet their specific needs – whether it be traditional construction funding, financing upon completion or a full scope of in-house project management services. Considering a custom-built property for your company? Reach out to our team today!
Flexible Solar Solutions Built Around Tenant Needs
As energy costs rise and decarbonization becomes an increasingly important business priority, many companies are exploring solar—but not every project looks the same. Through CareySolar, part of the energy solutions offering within Carey Tenant Solutions, we provide multiple pathways for solar adoption, helping tenants reduce operating costs and advance their sustainability objectives. Our approach is intentionally flexible, enabling close collaboration with tenants on solar strategies that align with their operational preferences and long-term goals. Tenants can take advantage of this offering through several project types: Landlord-Owned Solar: Turnkey Solutions with No Upfront Tenant Capital For tenants seeking the benefits of on-site renewable energy without the complexity of ownership, W. P. Carey can fund, design, install and maintain the solar system. Our turnkey solutions allow tenants to access on-site solar with no upfront capital investment or operational responsibility. W. P. Carey will sell electricity generated by the system to the tenant, which can significantly reduce tenants’ utility expenses, provide greater energy price stability and support corporate sustainability objectives. For example, in 2024, W. P. Carey entered into a power purchase agreement with an existing tenant, a healthcare products distributor, to fund and manage the installation of a roof-mounted solar system. The system became operational and began generating power in early 2025, offsetting approximately 90% of the building’s total power consumption. As a result, our tenant was able to significantly reduce its carbon footprint and utility costs without deploying upfront capital. Community Solar: Unlocking Value from Tenant Rooftops In addition to traditional solar, we can partner with tenants to develop community solar projects directly on their rooftops, transforming underutilized space into a shared renewable energy resource that generates power for the surrounding community. This energy is usually sold at a discount to both the tenant and local subscribers, reducing utility costs while also improving grid resilience and reliability. Another option is that tenants can receive Renewable Energy Certificates (RECs) from the system to offset their annual power consumption. Rooftop community solar represents another way we deliver creative energy solutions that benefit tenants, communities and our portfolio. We recently entered into an agreement with our tenant, a grill manufacturer, to manage and fund the construction of a 6.1 MW rooftop community solar system at their leased facility. Upon completion, the solar installation is expected to generate enough power for an estimated 580 homes in the surrounding community. Tenant-Owned Solar: Flexibility to Build, Own and Operate W. P. Carey also offers tenants the flexibility to build and own on-site solar systems, giving them full control over their projects. We partner closely with tenants to enable solar development at their leased facilities, allowing them to customize system design, capture available economic incentives and seamlessly integrate solar into their broader energy strategy. We supported our tenant, Sonae MC, on the installation of a 3.1 MW solar roof on their leased facility in Portugal. The solar roof offsets approximately 35% of the building’s annual consumption and thus significantly reduces the facility’s electrical power grid needs, helping Sonae save on energy costs. A Partnership Approach to Energy Solutions Solar is not a one-size-fits-all solution. Carey Tenant Solutions is designed to meet tenants where they are and evolve alongside their needs. By combining capital, real estate expertise and a long-term ownership mindset, we help tenants pursue practical, scalable energy solutions that support their long-term goals.
The Outlook for Industrial
The industrial real estate sector continues to stand out as a resilient and adaptive asset class, even amid economic uncertainty and shifting global dynamics. As we move through 2025, several dominant trends are shaping the trajectory of the market—from a fundamental shift in global supply chains to rising sustainability expectations, technological advancements and recalibration of capital strategies. Here’s a look at what’s driving the market: Onshoring and Supply Chain Reconfiguration The reshoring of manufacturing and logistics operations is no longer a speculative trend—it’s a structural shift. Spurred by pandemic-era supply chain disruptions and ongoing tariff concerns, companies are doubling down on operational resilience. This has led to a surge in demand for modern industrial space in inland and secondary markets, particularly near major highway corridors and intermodal hubs. This shift is putting pressure on developers to deliver new inventory quickly, even as construction costs and permitting timelines remain elevated. In particular, industrial locations in non-coastal metros are seeing increased activity as firms diversify away from traditional port-adjacent markets. Demand for Sustainable Real Estate Sustainability is no longer a “nice to have”—it’s a core tenant demand. Industrial occupiers are increasingly seeking energy-efficient, environmentally responsible facilities that align with their business goals and lower operational costs. This includes buildings equipped with solar-ready rooftops, LED lighting, EV charging infrastructure and LEED certifications. The push for greener buildings is also being driven by investors, who are factoring sustainability into underwriting and long-term asset value. Sustainable assets typically observe higher value in the market and are likely to lease up faster. Advancements in Technology From AI-enabled automation to smart building systems and robotics, technology is revolutionizing industrial and warehouse properties. In fact, more than a quarter of U.S. warehouse inventory is expected to be automated by 2027. Industrial occupiers leverage automation to create a more efficient process for moving products through their facilities, speeding up order fulfillment and improving inventory management. Properties equipped with automation and robust digital infrastructure are also typically viewed as “future proof,” making them more attractive to investors over the long term. Capital Markets and the Rise of Sale-Leasebacks Tariff concerns, economic volatility and tightened liquidity are prompting many corporate occupiers to turn toward alternative sources of capital, such as sale-leasebacks. This trend is especially pronounced in the industrial sector due to the strong investment profiles of these assets. The primary benefit of a sale-leaseback is the ability to immediately convert an illiquid real estate asset into liquid capital to meet both short- and long-term needs. Sale-leasebacks can also help boost a company’s balance sheet by putting them in a better cash position and improving their debt-to-equity ratio, enabling them to secure more attractive debt financing in the future should they need it. The Future is Bright Despite short-term headwinds such as tariffs and macroeconomic uncertainty, the industrial real estate market in 2025 is defined by transformation and opportunity. Onshoring is redrawing the logistics map, sustainability is reshaping development, technology is boosting efficiency and output, and capital markets are evolving to meet new financial realities. For stakeholders across the supply chain—from developers and investors to tenants and brokers—understanding these trends, and opportunities, is essential for navigating the road ahead.