Build To Suit

Build to suit exchange readiness prepares Fort Worth, Texas investors for the entitlement tracking and guaranteed maximum price review that a ground up construction improvement exchange requires, tied tightly to the one hundred eighty day exchange clock. A build to suit exchange, a variation on the improvement exchange, involves constructing an entirely new building on replacement land using exchange funds, which introduces entitlement, permitting, and construction risk on top of the standard exchange timeline pressures every investor already faces.

Tracking Entitlements Before Committing To The Timeline

Before an investor commits exchange proceeds to a build to suit structure, we recommend confirming that zoning, site plan approval, and any required variances are either already in place or realistically achievable within a timeframe that still leaves room for construction to reach substantial completion before day one hundred eighty. Entitlement delays are among the most common reasons a build to suit exchange runs into trouble, since a jurisdiction's permitting timeline is often outside anyone's direct control, and we help investors evaluate this risk honestly before deciding whether a build to suit structure fits within the exchange deadline at all.

Reviewing The Guaranteed Maximum Price Contract

A guaranteed maximum price, or GMP, contract with the general contractor caps the construction cost the investor is obligated to pay, providing budget certainty that matters given the fixed exchange fund pool available, and we review the GMP contract's scope, exclusions, and change order provisions closely, since gaps in scope can lead to cost overruns that exceed available exchange funds. We also confirm the construction schedule embedded in or referenced by the GMP contract leaves realistic margin before the one hundred eighty day deadline, accounting for typical delays in permitting, inspections, and material delivery that can affect a Fort Worth area construction project.

Because the Exchange Accommodation Titleholder typically holds title to the land and improvements throughout construction in a build to suit structure, we coordinate closely with the titleholder, the general contractor, and the Qualified Intermediary on draw schedules and inspection requirements, similar to a standard improvement exchange but with the added complexity of ground up construction rather than improvements to an existing structure. Investors considering a build to suit exchange in growth corridors like Alliance, where land availability supports new construction, should weigh this added complexity against the benefit of a purpose built asset matched to a specific tenant's needs.

We also help investors evaluate the tenant commitment underlying a build to suit project specifically, since these projects are typically constructed for a known future tenant under a pre negotiated lease, and the strength of that tenant's commitment, including any contingencies in the lease that could allow the tenant to walk away if construction is delayed or does not meet specifications, directly affects the investor's risk in the transaction. We review the lease's construction completion deadline and any tenant termination rights tied to delay, confirming these dates leave adequate margin relative to the one hundred eighty day exchange deadline the investor is separately managing, since a mismatch between the tenant's own patience for delay and the exchange deadline can put the investor in a difficult position if construction runs behind schedule. Site work and utility infrastructure, including water, sewer, and electrical service extension to a raw land site, are reviewed separately from vertical building construction, since site development can carry its own permitting and construction timeline that needs to be sequenced correctly with the building construction itself. We also confirm insurance coverage during the construction period, including builder's risk coverage held by the general contractor or the Exchange Accommodation Titleholder, since a gap in coverage during construction exposes the investor to risk that would not exist when acquiring a completed, stabilized property.

We also review the specific approval process for any required traffic impact study or utility capacity study a jurisdiction may require before issuing permits for new construction, since these studies can add unexpected time to the entitlement process on larger build to suit projects, and confirming whether a specific site is likely to trigger this kind of additional review is part of our upfront readiness assessment.

This service provides educational and coordination support only, working alongside the investor's own attorney and certified public accountant, and it is not tax, legal, or investment advice. Because Texas has no state income tax, the deferral achieved applies to federal capital gains tax and federal depreciation recapture only.