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Successful Build-to-Suits in the Real World

Successful Build-to-Suits in the Real World. Introduction to Presenters. Ted Anspacher, SIOR, Anspacher Commercial Real Estate Services Tim Gallagher, SIOR, Clayco Construction Company Tom Mercer, AMB Property Corporation Robert Whittelsey, SIOR, Colliers Bennett & Kahnweiler, Inc.

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Successful Build-to-Suits in the Real World

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  1. Successful Build-to-Suits in the Real World

  2. Introduction to Presenters • Ted Anspacher, SIOR, Anspacher Commercial Real Estate Services • Tim Gallagher, SIOR, Clayco Construction Company • Tom Mercer, AMB Property Corporation • Robert Whittelsey, SIOR, Colliers Bennett & Kahnweiler, Inc.

  3. Introduction • Goal: Enhance brokers ability to serve BTS clients. • Methods for achieving this goal: • Reviewing all aspects of BTS process. • Review real-life examples. • Detailed take-home materials on a CD.

  4. Topics of Discussion • Identify and determine the client’s scope. • Assemble the client’s BTS team. • Preliminary site selection and land control. • Points to remember in preparing RFP’s. • Projecting and analyzing costs. • How rents are calculated by developers. • Preparing and reviewing schedules. • Exit Strategy. • Understand and anticipate risks.

  5. Identify and Determine the Client’s Scope • Qualify Build-to-Suit Prospect • Understand the Client’s business. • Learn the Client’s goals and activities. • Understand Client’s time constraints. • Office Space program. • Industrial Space program.

  6. MITRE: A Clear Scope.

  7. US Postal Service: Heavy TI’s

  8. Compaq: There Will Always Be Change Orders

  9. Choose to work with people you trust.

  10. Assemble the Client’s BTS Team • Single Point of Contact with Client • Legal Counsel • Architectural Services • Engineer • Municipality Liaison / Economic Development • Title Officer • Project Manager Representation • Team Requirements

  11. Designing the RFP • Understand the Client’s business • Details of location & site parameters • Define Tenant’s scope • Project Business terms (for lease and for sale) • Project time line

  12. Content of the RFP • Turnkey Development Sale Price & Lease Terms • Estimated Operating Expenses • Lease Extension Quote • Hold Over Clause • Legal Issues • Answer Site Specific Questionnaire • Respond to Client’s Required Time Line • Developer / Land Owner Credentials & Track Record • Architectural Firms Credentials & Track Record

  13. Typical 3 Story Office Building PSF Costs

  14. Typical PSF Costs for a 200,000 Warehouse

  15. How Developers Calculate Rents • There are three ways for developers to calculate rents • Yield on Costs • Profit Margin • Return on Equity

  16. Yield on Costs

  17. Profit Margin

  18. Return on Equity

  19. Comparing Costs • Getting Apples to Apples Comparison • Require the responses to follow your format • RFP must be thorough and specific to obtain a GMP and/or Guaranteed Rent • Make a side-by-side analysis

  20. Preparing and Reviewing Schedules

  21. Exit Strategies • Generic Building • Cancellation Options (aren’t free) • Future Uses • Purchase Options • Divisibility • Don’t destroy the Landlord’s Exit Strategy

  22. Best and Final Offer • Negotiating Tactics: Talk to Everyone • Bring-up Changes in Scope • Get Apples to Apples Comparison • Getting to the Lease • Development/Indemnity Agreement • Straight to Lease / Purchase Agreement Negotiations

  23. The Major Areas of BTS Risk • Clearly determine and identify your client’s scope. • There will be change orders • Understand the risks to schedule: • Response time from client or other parties • Site Entitlements • Weather • Construction • Long lead time items. • The cost risks should be borne by the developer with the possible exception of site conditions. • Choose to work with people you trust.

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