Building a distribution center in the middle of a brutal Salt Lake City winter is challenging enough. Making the entire process financially viable while shifting delivery and budget risk (including winter conditions) onto the developer and landlord is what JLL’s Build to Suit Practice Group does best.
The JLL Chicago team of John Musgjerd, Ben Erskine and Steven Spinell recently changed their name to clearly reflect what they do best: build-to-suits on behalf of their clients. After completing Zurich North America’s critically acclaimed Schaumburg headquarters, the team, along with partner Todd Schaefer, connected with book publisher and distributor Readerlink on an entirely different project—a new 500,000 square-foot industrial distribution center servicing the western U.S.
After Schaefer and Erskine scoured the market, there were not any existing facilities that met all of the clients needs. With guidance from the JLL Capital Markets and Project and Development Services teams, preliminary analysis supported the financial viability of a build-to-suit assuming a long-term lease and Readerlink’s credit. Given the client’s extremely tight time frame, the team ultimately negotiated a tenant-favorable agreement where the landlord guaranteed a maximum price and project schedule with a firm completion date and painful consequences for delay.
A heavily negotiated provision in the construction agreement addressed winter conditions. Given the location and season, the severity of the coming winter weather posed a threat to the project schedule and budget. Having the leverage to shift this risk to the landlord proved to be worth hundreds of thousands of dollars as Salt Lake has endured an unusually snowy and wet winter.
“Based on market conditions, a well-negotiated build-to-suit has proven to be the most economical and operationally efficient solution,” said Erskine. “The agreement we reached with the developer and landlord provides the most protection for delivery on Readerlink’s aggressive timeline to be up and running ahead of its busy season.”
When faced with a build-to-suit project, the JLL Build to Suit Practice Group thrives on developing creative solutions to realize their client’s vision at the lowest possible cost. By taking control and creating competition in all of the work streams surrounding a build-to-suit, the JLL BTS team prioritizes transparency and driving optimal results for the end-user.
“The JLL team’s leadership and protection of our interests in this complex build-to-suit have markedly lowered our assumed risk and streamlined the construction process,” said Steve Carlson, Readerlink’s Executive Vice President and CFO.
Where in the world will the Build to Suit team go next? They’re about to kick off additional office and industrial projects in Chicago, North Carolina and New York. Check out their map of recent projects here!