Build-to-suit is the default route into Mexico for manufacturers who need a specific building, do not want to own real estate, and cannot wait for a suitable spec building to appear. It works well — provided you understand that the lease price is an output of the construction cost, not a market quote.
The one mechanism that changes how you should behave
In a build-to-suit, rent is not negotiated the way you negotiate rent on an existing building. It is derived: the developer totals land, construction, soft costs and financing, applies a return requirement, and the result is your rent.
Which means every specification change you request is converted into rent you pay for the whole lease term. A feature that adds 3% to construction cost does not cost you 3% once; it costs you a permanently higher rent for ten or fifteen years. This is why the most valuable work in a build-to-suit happens before the lease is signed.
Three parties, and why the tenant needs technical representation
A build-to-suit has three parties with different incentives:
Tenant (you)
Wants a facility that fits the operation for its full life, at the lowest sustainable rent. Usually has deep process knowledge and limited local construction knowledge.
Developer
Owns the land and the asset, carries the construction risk, and earns a return on total project cost. Has every reason to deliver exactly the specification written — no more.
Contractor
Builds to the contract documents. Under a build-to-suit, the contractor is normally engaged by the developer, not by you.
The structural issue is in the last line: the party building your facility has no contract with you. Your only instrument is the specification attached to the lease. If it is vague, the resolution favours whoever drafted it.
This is why manufacturers who have done it before bring their own technical representative to the specification stage — someone who reads the drawings the way a builder reads them, before the lease is signed rather than during construction.
The specification items you cannot change later
Some things are easy to adjust during fit-out. Others are frozen the moment the structure goes up, and getting them wrong means living with it or moving.
- Clear height. Set by the frame. Determines storage density and whether future automation is possible at all.
- Slab specification. Thickness, flatness class and point-load capacity follow from the material handling equipment you intend to run — including equipment you might run in year six.
- Electrical capacity. Not just the installed load but the available capacity at the site and the route to increase it. In Mexico this is a CFE question with its own calendar.
- Column grid. Fixes how production lines and racking can be laid out for the life of the building.
- Expansion land and expansion right. Whether the plot can take a phase two, and whether your lease gives you the right to build it. These are two separate questions and both belong in the lease.
- Floor-to-structure services route. Where process services can run. Retrofitting a route costs clear height, permanently.
A practical test for your own specification: for each item, ask what it would cost to change in year three. Anything that cannot be changed belongs in the lease exhibit in measurable terms, not in adjectives.
Build-to-suit versus the alternatives
The honest comparison:
Lease an existing spec building
Fastest and lowest commitment. You accept the building as designed and absorb the mismatch through fit-out. Right answer when a suitable building exists and your process is not unusual.
Build-to-suit lease
The building fits the operation, no capital is tied up in real estate, and the developer carries construction risk. You pay for that in rent, you commit for a long term, and you do not own the result.
Build your own
Lowest long-run cost per square metre and full control; requires capital, land acquisition, and carrying the construction and permitting risk yourself. Right answer when the facility is strategic and the horizon is long.
Hybrid
Some manufacturers lease build-to-suit for phase one and build phase two themselves once volume is proven. This only works if the land and the expansion right were secured at the start.
What actually sets the schedule
Build-to-suit timelines are usually quoted as construction duration. That is the shortest part. The real sequence:
- Specification and lease negotiation. Running in parallel, and the lease normally cannot close until the specification is firm enough to price.
- Land, land-use and permits. The developer's responsibility, but the tenant's problem if it slips, because occupancy date drives production start.
- Electrical connection. Independent of construction. For a plant with significant load this is frequently the controlling item and must be filed early.
- Long-lead equipment. Switchgear, transformers, chillers, air handling. Ordered backwards from required delivery, not forwards from the construction programme.
- Construction.
- Fit-out and commissioning. Yours, and frequently overlapping the developer's completion — which has to be agreed in the lease, not assumed.
Ask for a programme that shows the electrical connection and long-lead equipment as separate lines. If they are not there, the programme has not been thought through.
Mexico-specific points
CFE connection
Runs on its own calendar, independent of construction. For high-demand operations this is routinely the critical path and should be filed in the first weeks of the project.
Permits
Municipal construction licence and land-use confirmation, plus the environmental path where the operation triggers it. Parallel, but with a fixed sequence.
IMMEX and customs
If the operation will run under IMMEX, the requirements affect layout, access control and record-keeping. Known before layout is frozen, not after.
Industrial park versus standalone land
A park usually brings resolved utilities and access, at a land premium and with park rules. Standalone land can be cheaper and much slower. The difference is mostly schedule risk, not price.
Seismic and wind zone
Varies widely by region and changes the structure. A design imported from another country is not directly buildable.
Where we sit — and where we do not
We are a design-build and EPC contractor. We are not a developer and we do not own or lease industrial real estate. We say this plainly because in build-to-suit the roles get blurred in marketing and the distinction matters when something goes wrong.- For developers: we build build-to-suit facilities under design-build or EPC — a single contract covering engineering, procurement, construction and MEP, with scope and exclusions written into the proposal.
- For tenants: we act as technical representation at the specification stage — reading the developer's drawings and specification the way a builder reads them, identifying what is omitted, and turning adjectives into measurable requirements before the lease exhibit is signed.
- Fit-out: once the shell is delivered, we take the tenant's fit-out under a separate contract — process services, controlled environments, equipment foundations and MEP.
We do not represent the tenant and the developer on the same project. If we are building for the developer, we say so, and the tenant should bring their own technical reviewer.
Frequently asked questions
How is rent set in a build-to-suit?
It is derived, not negotiated the way rent on an existing building is. The developer totals land, construction, soft costs and financing, applies a return requirement, and the result is your rent. The practical consequence is that every specification change you request is converted into rent you pay for the entire lease term — a feature adding 3% to construction cost does not cost 3% once, it raises your rent permanently.
Which specification items can I not change later?
Clear height, slab specification (thickness, flatness class and point-load capacity), available electrical capacity and the route to increase it, column grid, expansion land and the contractual right to use it, and the route available for process services. A useful test: for each item, ask what it would cost to change in year three. Anything that cannot be changed belongs in the lease exhibit in measurable terms, not adjectives.
Build-to-suit or lease an existing building?
Lease an existing building when one suitable exists and your process is not unusual — it is faster and lower commitment, and you absorb the mismatch through fit-out. Choose build-to-suit when the building has to fit the operation, you do not want capital in real estate, and you accept a long lease term in exchange for the developer carrying construction risk.
Who does the contractor work for in a build-to-suit?
Normally the developer, not the tenant. That is the structural issue in this model: the party building your facility has no contract with you, and your only instrument is the specification attached to the lease. Where it is vague, the resolution tends to favour whoever drafted it — which is why experienced manufacturers bring their own technical representative to the specification stage.
What usually controls the schedule in Mexico?
Rarely the construction itself. The CFE electrical connection runs on its own calendar and is frequently the critical path for high-demand operations; it should be filed in the first weeks. Long-lead equipment (switchgear, transformers, chillers, air handling) is ordered backwards from required delivery. Municipal licence, land-use and the environmental path run in parallel but in a fixed sequence.
Do you act for the tenant or the developer?
Either, but never both on the same project. We are a design-build and EPC contractor, not a developer, and we do not own or lease industrial real estate. For developers we build the facility; for tenants we provide technical representation at the specification stage and take the fit-out under a separate contract. If we are building for the developer, we say so and the tenant should bring an independent reviewer.