Most tenants pursuing a built-to-suit facility spend considerable time on site selection, space programming, and lease negotiations. Far less time tends to go into vetting the developer who will actually deliver the building. That imbalance is where build-to-suit projects run into trouble.
A build-to-suit project is a multi-year commitment built on a relationship you haven’t stress-tested yet. The developer controls your timeline, your construction budget, and the quality of the building you’ll occupy for the next ten to twenty years. Choosing the wrong one doesn’t just create problems during construction—it creates problems for the life of the lease.
Build-to-suit real estate is a distinct discipline within commercial development, and it requires a different capability profile than general commercial construction or speculative development.
A developer building speculative space carries risk on their own balance sheet and makes design decisions based on market assumptions. A build-to-suit developer is building to your specific requirements, on your timeline, within a budget that your business case depends on. The relationship is more like a long-term partnership than a transaction, and the developer’s experience, financial stability, and internal capabilities matter in ways that don’t apply to other real estate decisions.
Many firms offer build-to-suit development services. Not all of them have the project depth, the in-house capabilities, or the operational track record to deliver a complex built-to-suit facility on time and on budget. The vetting process is how you tell the difference before you’re eighteen months into a project.
The first question in any developer evaluation is whether they’ve built what you need before, and recently. A build-to-suit development for a medical office operator has different requirements than a manufacturing facility or a corporate headquarters. Floor plate configuration, infrastructure requirements, regulatory compliance, and construction methodology all vary by building type.
Ask for a portfolio of completed projects that are comparable to yours in use type, size, and complexity. Then ask what went wrong on two or three of them and how the developer handled it. A developer with genuine project depth will answer that question specifically. One without it will pivot to what went right.
References matter here more than anywhere else in the evaluation. Contact completed-project tenants and ask about the delivery experience, not just the finished building. Specifically ask whether the project came in on time, whether the budget held, and whether the developer was accessible and responsive when problems came up. Most build-to-suit problems are manageable if the developer communicates clearly and moves quickly. The ones that become expensive are the ones where the developer went quiet.
Build-to-suit developers vary significantly in how much of the project they actually control. Some developers coordinate the process but rely on a network of outsourced partners for site selection, design, construction management, and property management after delivery. Others carry those capabilities in-house.
The difference matters for two reasons. First, a developer with in-house capabilities has better control over timeline and cost. Every handoff between an outside party and a general contractor, or between a developer and a third-party property manager, is a point where things slow down, miscommunicate, or fall through. Second, in-house capabilities signal that the developer has genuine operational depth, not just project coordination experience.
Ask specifically: Who manages the general contractor relationship? Who handles entitlement and permitting? Who manages the property after delivery? If the answer to most of those questions is an outside firm, understand how those relationships are structured and who is accountable when something goes wrong.
Hokanson’s build-to-suit practice spans all five disciplines in-house: brokerage, construction, property management, maintenance, and development. That integration is a practical advantage because handoffs between siloed firms are where timelines and budgets most often break down.
A build-to-suit project can take eighteen to thirty-six months from site selection to delivery. The developer you’re working with needs to be financially stable enough to carry the project through that timeline, including inevitable delays and cost pressures.
Ask how the developer is capitalizing the project. Is it entirely equity-funded? Is there a construction loan, and if so, is it committed? Who are the lending relationships, and are they established or speculative? A developer who can answer these questions clearly and specifically is one with a solid financial foundation. Vague answers about “access to capital” or “strong investor relationships” are not the same thing.
Also ask what happens to your project if the developer faces financial difficulty mid-construction. What protections exist in the development agreement? What rights do you have to the project if the developer can’t complete it? These are uncomfortable questions to ask, but they’re exactly the questions a sound developer should be able to answer without hesitation.
Timeline and budget performance are the two metrics that matter most to a tenant in a build-to-suit project, and they’re the ones most subject to optimistic projections during the sales process. Every developer will tell you their projects come in on time and on budget. The ones who’ve actually done it can prove it.
Ask for specific project data: What was the original projected delivery date and what was the actual delivery date on the last three comparable projects? What was the original budget and what was the final cost? What were the primary sources of schedule and budget variance, and what did the developer do to manage them?
Pay attention to how the developer frames variance. Cost overruns and schedule delays happen on complex build-to-suit projects. A developer who pretends otherwise isn’t being straight with you. A developer who explains specifically what drove variance, what they did to control it, and what they learned from it is giving you a much more useful picture of what working with them actually looks like.
The build-to-suit development process ends at occupancy, but your relationship with the building doesn’t. Understanding what the post-delivery relationship looks like is an underappreciated part of developer vetting.
Some build-to-suit developers hand off the building at delivery and have no further operational role. Others maintain a property management relationship that covers ongoing maintenance, capital planning, and tenant services. If you’re signing a ten- or fifteen-year lease, the quality of that post-delivery management relationship has a direct bearing on your occupancy experience and your building’s long-term performance.
Ask whether the developer offers property management services and, if so, whether those services are in-house or subcontracted. Ask what a preventive maintenance program looks like under their management. Ask how maintenance issues are handled after hours. The answers tell you a great deal about whether the developer thinks of the project as a transaction or as the beginning of a longer relationship.
Evaluating build-to-suit developers for an upcoming project? Hokanson has delivered build-to-suit facilities for healthcare systems, financial institutions, and corporate tenants across the Midwest since 1938 with brokerage, construction, development, property management, and maintenance all in-house. We can answer every question in this framework.
Most developer selection mistakes are foreseeable if you know what to look for. These are the signals worth taking seriously:
These questions are designed to reveal how a developer actually operates, not just how they present themselves:
A developer who can answer these questions specifically and without deflection is one worth continuing the conversation with. One who struggles with them is showing you something important before the project starts.
Build-to-suit developers typically earn a development fee, usually a percentage of total project cost, in addition to any profit on the project itself if they hold an ownership position in the building. Fee structures vary: some developers are paid at milestones, others at delivery. Make sure you understand the fee structure and how it aligns with the developer’s incentive to deliver on time and on budget. A developer who gets paid in full at groundbreaking has a different incentive structure than one whose fee is contingent on delivery and performance.
A general contractor builds what they’re given. A build-to-suit developer manages the entire process: site identification, entitlement, design coordination, construction oversight, and in some cases property management after delivery. The developer is accountable for the full project outcome, not just the construction phase. In practice, the quality of a build-to-suit project depends heavily on how well the developer manages the GC relationship and whether they have the in-house expertise to catch problems before they become expensive.
Timeline depends on the complexity of the project and the site, but most build-to-suit projects run eighteen to thirty-six months from site selection to delivery. The longest phases are often entitlement and permitting, which are heavily dependent on the jurisdiction and the intended use. A developer with local market experience and existing relationships with permitting authorities can meaningfully compress this timeline compared to one who is new to the market.
Yes, and you should. Key points of negotiation include the development fee structure, cost-control mechanisms for change orders, delivery date commitments and penalties for delay, quality standards and punch-list resolution processes, and post-delivery obligations. Tenants pursuing a build-to-suit real estate project should have legal counsel review the development agreement before signing. The development agreement governs the entire project relationship and is worth negotiating carefully before construction begins.
Specialized facilities like medical offices, manufacturing plants, food production, data centers require developers with specific experience in the regulatory and infrastructure requirements of that building type. General build-to-suit development experience is not sufficient for a project with specialized mechanical systems, regulatory licensing requirements, or unique structural needs. Ask specifically for portfolio examples of the facility type you’re building, and verify those references directly with the tenants who occupied them.
Choosing the right build-to-suit developer starts with asking the right questions. Hokanson has completed build-to-suit projects across the Midwest for healthcare systems, financial institutions, and corporate tenants since 1938. If you’re evaluating developers for an upcoming project, we’re ready to answer every question on this list. Request a consultation to get started today.
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