Net lease glossary
Build-to-Suit
A development where the landlord constructs a building to a specific tenant's specifications, and the tenant signs a long-term lease before or during construction.
In a build-to-suit, a developer acquires land and constructs a building designed for a particular tenant, who commits to a long-term lease, often net, before construction. Rent is typically set as a return on total project cost. Many new single-tenant net lease assets, such as quick-service restaurants, auto parts stores, and dollar stores, come to market as build-to-suits. Buyers should review construction quality, the tenant's acceptance of the premises, and when rent commenced.