Quick Takeaways

  • Tenants own the building but not the land it is built on
  • Ground leases usually run from 20 to 40 years
  • After the lease expires, the improvements belong to the landlord

Source: What Is a Ground Lease? (The Motley Fool, Feb. 18, 2022)

Ground leases are used in commercial real estate. The real estate developer leases the land from the tenant for a period of up to 99 years. The developer makes improvements and at the end of the lease term, the improvements become property of the landowner. This type of lease allows landowners to make a profit from the land without having to sell it. Ground leases are expanding beyond the office and multifamily market in New York across the nation in to hospitality as well.

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