Full Definition
Build-to-suit is a development strategy where a developer secures a tenant commitment (signed LOI or lease), acquires land, and constructs a property to the tenant's specifications. The property is typically sold after stabilization to a passive investor. BTS is the primary model for NNN retail development (Dollar General, AutoZone, Walgreens, etc.).
Related Terms
Development Spread
The difference between a development project's yield on cost and the market cap rate. The profit margin of ground-up CRE development.
Yield on Cost
For development deals: stabilized NOI divided by total development cost. The development spread vs. market cap rate.
NNN Lease (Triple Net Lease)
A commercial lease where the tenant pays property taxes, insurance, and maintenance on top of base rent — making the landlord's income almost entirely passive.