Build-to-suit development has long been part of the industrial playbook, but the model has surged to the forefront as occupiers chase efficiency, automation and speed in an increasingly complex logistics environment.
That shift began to take shape around 2015, when e-commerce users started demanding building specifications that existing warehouse inventory could not deliver. The pandemic then pushed that trend into overdrive.
"The pandemic accelerated it sharply," David Greek, managing partner at Greek Real Estate Partners, told GlobeSt.com.
"Supply chain disruptions from 2020 through 2022 pushed occupiers to rethink resiliency, automation, and proximity to end consumers, and build-to-suit became the most direct path to those outcomes."
For landowners, the approach offers a way to unlock maximum value from well-located sites while giving tenants greater cost certainty and faster delivery timelines, Greek said.
The most active users of build-to-suit tend to fall into a few distinct groups, all driven by operational needs that standard industrial product cannot meet. Occupiers with heavy automation requirements are a leading cohort, as systems such as conveyors, robotics and automated storage and retrieval demand precise specifications for clear heights, floor loads, column spacing and power capacity.
Third-party logistics providers are also active, particularly when executing contracts in which the end user dictates the building's design. Meanwhile, companies operating same-day and next-day delivery networks in dense population centers require highly specialized layouts that support rapid picking, sorting and last-mile distribution.
"We are also seeing manufacturers reshoring operations and cold storage operators turn to build-to-suit, since both categories have specifications that speculative product rarely meets," Greek said.
Yet, those tailored designs carry a premium over conventional speculative warehouses, driven by customized construction, enhanced power infrastructure, heavier floor slabs and integrated technology. Depending on the level of automation and tenant requirements, the premium generally ranges from 10 percent to 25 percent above comparable-spec development.
Even so, Greek emphasized that the upfront cost tells only part of the story.
"The more important number is the total cost of occupancy over the lease term," Greek said. "A purpose-built facility reduces travel time, labor hours, and bottlenecks every single day it operates. It also tends to lower headcount requirements and maintenance costs.
"For occupiers running tight-margin logistics operations, the operational savings over a 10- to 15-year lease generally outweigh the upfront premium."
Geographically, build-to-suit activity is concentrated in dense, land-constrained logistics hubs where efficiency gains carry the greatest value. Key markets include the Inland Empire, Lehigh Valley, Central Pennsylvania, Dallas and Atlanta.
Northern New Jersey and the broader New York metro remain among the most active build-to-suit regions in the country, supported by port access at Newark and Elizabeth, high population density and a severe shortage of developable land.
"When land is this scarce and this expensive, building up, building smart, and integrating automation is what makes the economics work over the long term," Greek said.
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