Built-to-Suit (BTS) warehouses are revolutionizing India’s logistics and warehousing industry, offering a tailored and efficient solution for businesses. This blog delves into the intricacies of BTS warehouses, from their customization and construction to the manifold benefits they provide to businesses.
What is a Built-to-Suit Warehouse?
“Built to suit” refers to a real estate strategy wherein a building is meticulously crafted to meet the distinct specifications and needs of a specific tenant or buyer. The developer engages closely with the prospective occupant to comprehend their requirements, preferences, and operational necessities. This collaboration ensures the resulting building is uniquely designed, aligning perfectly with the occupant’s needs and eliminating the need for extensive modifications post-acquisition.
Speculative Warehouse Model
In contrast, the Speculative or Ready-to-Move (RTM) model involves developers constructing standard warehouses without a specific tenant in mind. These warehouses are built based on market demand and industry standards, with limited customization options for potential tenants. They are ready for immediate occupancy, designed in anticipation of future tenants, and their location is typically chosen by the developer based on factors like land availability and market demand.
BTS vs. Speculative Warehouses: A Comparative Overview
1. Flexibility and Tailored Solutions: In a BTS Warehouse, Businesses can enjoy the benefits of custom-designed warehouse spaces that offer flexibility and can be tailored to their specific needs. Traditional Speculative Warehouses often have fixed layouts and configurations, limiting their ability to adapt to changing business requirements
2. Efficient Operations: The integration of specialized equipment and industry-specific requirements in BTS warehouses leads to improved efficiency and streamlined operations. Speculative or Ready to Move warehouses may not be optimized for specific industries or operational workflows, resulting in less efficient processes.
3. Location Choice: In a BTS Model, tenants can select a suitable location that best suits their business needs, enhancing accessibility and reducing transportation costs while in a traditional model businesses may have limited options for location selection, as they have to choose from existing warehouse spaces in the market.
Benefits of Built-to-Suit Warehouses
1. Customization for Efficiency
BTS warehouses are tailor-made to suit the tenant’s specific needs, promoting workflow efficiency. This customization can include features such as optimized space configuration, equipment integration, and operational workflows, all contributing to a more streamlined and productive warehouse environment. For example, a BTS warehouse for an e-commerce company may include automated sorting systems and conveyor belts to facilitate faster order processing and shipping.
2. Strategic Locations for Supply Chain Management
Tenants have the opportunity to choose convenient locations for their BTS warehouses, enhancing supply chain efficiency and reducing transportation costs and delivery times. For example, a BTS warehouse located near major highways and transportation hubs can facilitate faster and more cost-effective distribution of goods.
3. Collaborative Approaches
The BTS warehouse development process often involves effective communication and collaboration among stakeholders, including the tenant, developer, and construction teams. This collaborative approach ensures a seamless warehouse creation process, leading to better outcomes in terms of design, functionality, and timeline.
4. Branding Opportunities
BTS warehouses offer a chance to reflect a company’s identity, fostering brand recognition and customer loyalty. For example, a BTS warehouse for a retail brand may incorporate its logo, colors, and signage, creating a cohesive brand experience for employees, partners, and customers.
5. 3PLs Top Choice
As 3PLs have multiple companies’ supply chain operations under their roof, they are turning to BTS warehouses for one powerful reason: it’s the warehousing solution as per their custom needs, to deliver seamless operations and rapid growth acceleration.
6. Custom Technologies
Leading BTS developers pave the way with cutting-edge technologies. Automation and robotics revolutionize warehouse efficiency, reducing labor costs and this combined with optimized supply chain management, brings unparalleled achievement.
The Future Growth Prospects for Built-to-Suit Warehouses in India
The demand for logistics and warehousing space in India is being driven by various industries such as manufacturing, healthcare, electronics, automotive, and building materials. The Indian government’s focus on business-friendly policies, industrial development, and economic growth has attracted both global and domestic institutional investors, further propelling the expansion of BTS warehouses in the country.
This trend aligns with market demands and meets the needs of developers and occupiers. According to JLL, built-to-suit solutions accounted for almost 40% of warehousing absorption in India in 2019. Beyond India, third-party logistics (3PL) companies, including those in South East Asia, are increasingly embracing BTS solutions to leverage the capital, resources, and expertise of commercial real estate developers while having control over the design, construction, and management of new facilities.