Growth and active development of companies in the country determine the increasing need not only for office and administrative facilities but also for production and storage ones. Companies are often dissatisfied with the available supply of such facilities – ever more often they require the ones that would meet their specific needs instead of the standardized ones. According to real estate experts, this is why the so-called built-to-suit projects, when companies invest into the construction of the facilities that would meet their specific needs are becoming more and more popular.

Specific constructions are becoming more popular

Aurimas Astramskas, a partner of the RE company “Solid Real Advisors”, which provides real estate services and is currently working on built-to-suit projects, explained, that this model is becoming more and more attractive to multiple companies and for some of them it is often the only rational solution. “The companies already tend to invest more to acquire the facilities that perfectly meet their needs. It is especially relevant to production and logistics industries, where the nature of the activities of the companies itself dictates the necessity of certain specific solutions,” commented A. Astramskas.

Solutions for the specialized companies

One of the latest examples of such projects is the construction of logistics complex for pharmaceutical company “Oribalt Vilnius”. Project has recently been started in the close proximity to Vilnius. As requested by “Oribalt Vilnius”, RE Investment Company “Baltic Sea Properties” has designed and will construct storage and office facilities of 6.5 thousand sq. m. and there still will be a possibility to expand. The company rented the facilities constructed according to its needs under preliminary contract from the developer. The investments of the construction of the complex are expected to reach up to EUR 4.8 million. “In case of this project it is necessary to consider the variety of technological aspects: some spaces must be cooled, in some - certain temperature mode must be maintained, some have to meet specific storage requirements of the products that are stored there, and the entire territory is under protection. Specific nature of the production also determines unusual dimensions of the storage spaces, as well as unique design, engineering and technical solutions for the storage spaces,” said A. Astramskas who manages the company that helped to search for the property for “Oribalt Vilnius” and coordinated the built-to-suit deal.

According to the RE expert, it is basically impossible to find the already existing facilities that would meet such specific needs and it is often financially ineffective to adapt the projects that are already designed and developed or under construction as the final result still will not meet the expectations of the client. For these reasons, financially strong companies with individual needs choose the built-to-suit model more and more often, opting for exactly what they need and not for what the market can offer them.

Standard “boxes” do not meet the needs anymore

Meanwhile, Sigitas Jautakis, the managing director of the company “Baltic Sea Properties” in the Baltic States, stated that production and logistics companies in Lithuania jumped on the built-to-suit bandwagon quite late, therefore, the potential of the market in this field is still high. “In the field of logistics, the companies are still quite often offered standardized “boxes” or both technically and morally outdated buildings constructed in Soviet times. Obviously, such supply does not satisfy modern companies working with foreign markets,” said S. Jautakis.

Cost reduction

According to him, built-to-suit projects often allow companies to reduce operational and maintenance expenses of the facilities. New facilities are usually rated high on energy performance as effective heating and cooling systems are installed, modern infrastructure is developed.

If one wants to make employees work outside the city, where logistics companies are usually situated, comfort of people in the facilities must be taken into consideration as well. “Appropriateness of the facilities for the employees is also an important aspect. Today, when production and logistics companies put so much effort into attracting the best experts needed, work environment becomes a very important factor. Therefore, modern administrative spaces with dining and recreational areas are designed in built-to-suit projects.” - said S. Jautakis.

Longer-term obligations are undertaken

Kęstutis Adamonis, a partner of the law firm “Sorainen”, indicated that the lessees of the facilities constructed by built-to-suit model usually undertake stricter and longer-term obligations. “In such cases most commonly a long-term contract is signed without a possibility for the lessee to terminate it before the end of the contract. Besides, the developers of the project usually require a guarantee from the parent company of the lessee or a higher bank guarantee in addition to financial deposit. It is so, because in case the lessee cannot comply with the obligations as per the rent agreement or in case the rent agreement for some reason is terminated earlier, the losses experienced by the owner in case of a built-to-suit project are often more significant because of the special features of the object and limited opportunities of its alternative use,” commented the lawyer.