BUILT TO SUIT: How the Supply Adapts to the Demands

Built to Suit spaces are real estate properties designed and constructed according to the unique and precise specifications of a specific tenant. BTS spaces are often pre-leased, allowing for total customization to meet particular business needs.

In the world of commercial real estate, the trend towards "Built to Suit" (BTS) spaces, tailored for tenants, has experienced notable growth in recent years. This approach reflects an increasing adaptability to the specific needs of businesses, setting a trend in the industry.

According to data from SiiLA Market Analytics, since 2021, there has been a steady increase in the delivery of BTS spaces across all industrial markets. These tailor-made spaces for tenants represent a direct response to market demand and reflect a strategy that aims to align with the changing needs of businesses. However, speculative spaces, built before securing a tenant, also maintain their presence in the market, highlighting the diversity of approaches in the industry.

In recent years, the proportion of BTS and speculative spaces has experienced notable fluctuations. In 2020, the ratio was 13% BTS and 87% speculative. However, in 2021, a significant shift was witnessed with a more balanced ratio of 52% BTS and 48% speculative.

This trend has continued to evolve, reaching a midpoint in 2022 with 62% BTS and 38% speculative. In 2023, the ratio adjusted again, reaching a balance of 41% BTS and 59% speculative.

The nearshoring phenomenon and post-pandemic effects have played a key role in this transformation of the real estate market. The need for adaptability and efficiency in operations has led to an increase in demand for spaces specifically designed to meet the needs of businesses.

In particular, the Industrial market in Monterrey has witnessed an even more pronounced shift in the trend of newly delivered spaces. In 2020, the ratio overwhelmingly favored speculative spaces at 95%, but in 2021, the balance shifted with 57% BTS. This trend continued with 43% BTS in 2022 and reached a surprising 50/50 split in 2023.

An interesting aspect that emerges when analyzing both types of spaces is the average size of the warehouses. Throughout the four years, the average size of speculative warehouses has remained constant, around 8,000 m2. In contrast, BTS warehouses have a considerably larger area, averaging 22,000 m2. This difference highlights the specific and adaptive nature of BTS spaces, designed to meet the individual needs of tenants.

The growing popularity of "Built to Suit" spaces reflects a new era in the commercial real estate market, where flexibility and adaptability are key. This trend not only responds to the changing demands of businesses but also offers attractive investment opportunities for those looking to capitalize on a constantly evolving market. To learn more about this topic, visit SiiLA REsource or contact us at contacto@siila.com.mx.