Difference between Ready to move and Built to suit warehouse facilities

According to Knight Frank’s India Warehousing Market Report 2019, warehousing markets in India witnessed a growth of 77% year -on -year in leasing in April 2018 – March 2019. Builders and developers are in pursuit of constructing huge warehouse spaces to satisfy occupier needs and flexibility. Largely, two models evolve in the space – Built to suit and Ready to move warehouse facilities.

Built-to-suit (BTS) warehouse facility is a model wherein occupier is committed to taking space on lease and the space is customized according to his/her requirements by the developer. All the design and construction requirements are shared at the outset by the leaser, which when agreed upon, the actual warehouse construction commences, as per the specifications of the business firm and the BTS agreement signed at the outset.  Customised design as per client’s needs is brought to life using resources and expertise of developers. This unleashes the dynamism and flexibility that businesses require to handle contemporary logistical challenges and bottlenecks, with the advent of e-commerce logistics and booming warehousing market in India.

In the ready-to-move (RTM)/speculative warehouse model, the developer has already built a warehouse based on general sizing, and then the client goes ahead and purchases the same on a lease/purchase model. Customization with respect to specific requirements is absent. The financial security for the developer is also considerably low compared to BTS, as the developer builds the facility and then it is available for uptake. The average space taken up has been growing exponentially, with bigger players entering the market and logistics supply chain getting streamlined. In this case, one-size-fits-all approach provided by speculative market does not have a global appeal, especially seen in the light of long-term growth needs.

In BTS, the tenant can choose a desired location based on support infrastructure in the catchment area which his supply chain can service efficiently. It also helps to work in tandem with developer to ensure end-to-end process coordination and cutting down unnecessary procedural hassles for the client. Land acquisition, design, construction and hand-off strictly as per client’s customized requirements makes BTS space efficient and build its brand grounds up. Customized architectural framing with company’s distribution and warehousing needs matching market demands characterize BTS model.

The RTM/Speculative segment does not involve any pre-lease as BTS model, as the developer deems there is already enough demand in the market that a lease commitment is ought to come through sooner than later when the finished building is available for use. This “no formal commitment” pre-built space is perfect for clients who want to get down to work right away after occupation. In general, these size-specific spaces cheaper than built-to-suit warehouses, with pre-built fabrications.