There are many design and construction delivery methods available to public and private clients today. Across sectors, many clients are facing aging facilities that hinder efficiency and drive up operational costs. For those clients who have a steady income stream but have periodic gaps in their capital reserves or bonding capacity, the lease build-to-suit process offers significant advantages.
Often referred to as Public Private Partnerships (P3) in government agency projects, the lease build-to-suit delivery method allows the client to advance their facilities replacements without increasing debt load. It also minimizes up-front staff costs and risks while establishing a predictable monthly cost for the organization upon successful completion. This process is not one size fits all. Its success depends on tailoring the process to the client’s experience level and the capabilities of available design, build, finance, and development teams.
In its basic form, the process requires the client to define the scope, performance expectations, measurable critical success factors of the project, create an agreement, and prepare the request for qualifications (RFQ), request for proposal (RFP), and lease requirements. When a client brings its existing property into the process, they need to perform sufficient due diligence investigations, including title reports, environmental studies, an ALTA survey, utility will-serve letters, geotechnical reports, and entitlements, if applicable. This data equips proposing teams with the information necessary to provide accurate lease pricing.
For clients who struggle to locate appropriate land for their project, it can be advantageous to have the developers propose a property as part of their response. While this shifts more risk to the lease-build-to-suit team early in the process, it can broaden site options and spark more competitive solutions. Less experienced clients should reach out to experienced agencies that have completed similar projects, including reviewing sample agreements and lessons learned. The Design Build Institute of America (DBIA) is also a great resource to supplement the client team’s knowledge.
Although some agencies combine the RFQ and RFP into a single step, separating them offers several advantages. A standalone RFQ phase allows the client the opportunity to evaluate team qualifications, narrow the competitive field, and avoid requiring the extensive pricing effort by the interested responding teams. High-performing lease-build-to-suit teams also tend to avoid pursuits with overly large or inexperienced pools of proposers, which can reduce the quality of the competition. DBIA best practices recommend shortlisting four to five teams for interviews and advancing three teams to the proposal phase.
In the RFP phase, it is important to allow for at least two confidential meetings for each team. These sessions allow the client to observe the team dynamics, management capabilities, and problem-solving approaches. Because the lease build-to-suit project results in an ongoing relationship well beyond occupancy, these meetings offer insights not easily observed through written or graphic submissions alone.
Most lease build-to-suit projects also require long-term maintenance of the facility and equipment replacement obligations during the lease period. Although maintenance is always a consideration in design decisions, this delivery process changes the design-build team’s priorities. Team decisions that may have focused on quality, sustainability, constructability, and speed of delivery are tempered by the developers’ focus on minimizing unexpected replacement costs and ensuring straightforward maintenance access.
Nacht & Lewis have participated in design-build, design-build-finance, and design-build-finance-maintain teams in all of our project sectors. Our experience includes serving as criteria architect, quality control architect, and architect of record. Nacht & Lewis, DPR Construction, and Capital Avenue Development partnered on the California Highway Patrol (CHP) Replacement Facility in Stockton. Building on lessons learned from the CHP Grass Valley Facility, our team optimized the design to provide maximum efficiency and value to the state.
Our approach emphasizes minimizing maintenance needs while maximizing energy efficiency and operational productivity, all within a competitive budget. The facility incorporates energy monitoring systems to support future Net Zero building designs. Funded through state vehicle registration fees, the project delivers a secure and efficient environment that is approachable for the public while maintaining a supportive, safe setting for staff.
Materials and design strategies were carefully selected for longevity and low maintenance costs. On-site renewable energy systems and integrated metering set the stage for a Zero Net Energy future, demonstrating how thoughtful design-build-finance-maintain collaboration can achieve both fiscal responsibility and sustainable design.
Nacht & Lewis would be happy to discuss our experience further with clients considering a project using these delivery methods.
Glossary of Key Terms
Lease-Build-to-Suit
A project delivery method in which a developer designs, finances, and constructs a facility specifically tailored (“built to suit”) to a client’s operational needs. The client leases the facility for a defined term, gaining access to a new building without taking on traditional capital debt.
Public-Private Partnership
A collaborative delivery structure, commonly used by government agencies, in which public and private entities share responsibilities related to design, construction, financing, operations, and/or maintenance.
Design-Build-Finance
A delivery model in which a private team provides integrated design and construction services and arranges project financing. The client repays the private partner over time, reducing upfront capital requirements.
Design-Build-Finance-Maintain
An extension of the design-build-finance model that also includes long-term facility maintenance and lifecycle replacement responsibilities. The client benefits from predictable operational costs and performance-based maintenance throughout the lease or concession term.
Written by: Mike Smith, AIA | Public Safety Lead, Associate Principal
