REmark

BTS

Spec

Speculative vs Build-to-Suit Industrial Construction

2025

2024

2023

2022

2021

2020

50%

2019

OF THE MARKET

CONFIDENCE AND THE STATE

REVEALS ABOUT DEVELOPER

WHAT SPEC CONSTRUCTION

Insights

Spec-tacular

100%

80%

60%

40%

20%

The Pandemic Shift While initial uncertainty and rising construction costs put a damper on spec construction in the very early stages of the 2020 COVID pandemic, leasing activity thrived as many companies to sought more effective distribution strategies. Aided by historically low interest rates, developers recognized and responded to the trend and the ratio of spec construction to BTS projects shifted to a bullish approach by late 2021.

Top view, Team engineer building inspection use tablet computer and blueprint working at construction site. Civil Engineer, Contractor and Architect discussing in construction site.

2023: A Record Year Spurred by two years of strong leasing, developers greenlit a record number of projects in late 2022 and early 2023, with spec developments as a significant majority of activity. 115 buildings totaling 38.9 MSF were delivered in 2023, marking the peak of the post-COVID industrial construction boom.

Many different multiclored colorful heavy industrial machinery equipment at construction site parking area against warehouse building city infrastructure development. Commercial vehicles rental sale.

2024's Cautious Slowdown Much of the newly built, speculative product remained on the market. New supply overtook demand and vacancy rates began to tick up. Fears of oversupply became a topic of discussion. BTS projects overtook spec developments for the first time in years. Construction deliveries dropped from 38.9 MSF in 2023 to 15.9M SF.

Structural engineer and architect working with blueprints discuss at the outdoors construction site.

Present Day By the second quarter of 2025, 61.3% of the 31.1 MSF of speculative space delivered in 2023 had been leased, leading to a shift in developer confidence. By size, new spec construction projects (5.7 MSF underway) now slightly outweigh new BTS projects (5.6 MSF) 50.5% to 49.5%. There are 33 projects underway; 20 are speculative and 13 are BTS.

Close-up of excavator at construction site. Backhoe digging soil for earthwork and construction business. Excavating machine at work. Heavy machinery for earth moving and construction site development

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Source: Hiffman Research

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