Build-to-Suit
Understand build-to-suit in Canadian real estate — what it is, its benefits, and how it works for tenants and developers.
August 07, 2025
What is Build-to-Suit?
Build-to-suit is a real estate development strategy where a property is custom-built to meet the specifications of a tenant or buyer.
Why Build-to-Suit Matters in Real Estate
In Canadian commercial and industrial real estate, build-to-suit projects allow tenants to occupy customized facilities while developers secure long-term lease commitments.
Advantages:
- Tenants receive tailored property designs
- Developers reduce leasing risks
- Typically structured with long-term leases
Understanding build-to-suit arrangements helps tenants and developers align business and real estate objectives.
Example of Build-to-Suit in Action
A retail chain entered into a build-to-suit agreement for a flagship store designed to their specifications.
Key Takeaways
- Property built specifically for a tenant or buyer
- Reduces vacancy risk for developers
- Provides customized design for tenants
- Common in commercial and industrial sectors
- Usually involves long-term commitments
Canadian respondents were more likely to expect an undersupply of development/redevelopment equity capital (63%) than debt capital (46%) in 2027. These are survey expectations, not measured financing volumes. Source: PwC and ULI, Emerging Trends in Real Estate 2027, pp. 136–137. Original chart.
Toronto census metropolitan area housing starts fell from 37,718 units in 2024 to 26,087 in 2025, a 30.8% decline (rounded to 31%). Starts measure construction begun, not completed homes. Source: CMHC, as cited in PwC and ULI, Emerging Trends in Real Estate 2027, p. 145. Original chart.
Illustrative calculation: a $4.5-million value ceiling versus income-based capacity of about $4.25 million at 4%, $3.62 million at 5% and $3.13 million at 6%. Assumes 50-year amortization and 1.15 debt coverage.
Source: Department of Finance missing-middle backgrounder and Budget 2026 Chapter 3, November 5, 2026. Fiscal-year funding starts are not home-completion dates.
