Ground Leases: An In-Depth Exploration

Ground leases are a unique and complex form of real estate transaction that offer distinct advantages and challenges for both landlords and tenants. Unlike traditional leases that involve the short-term leasing of land and improvements requiring initial upfront investment from the landlord – and unlike purchases requiring a complete divestment of the property and a high upfront purchase price from a buyer – a ground lease blends these two legal structures to form a unique relationship that provides long-term income and certainty for landlords, as well as long-term flexibility and stability for tenants. A ground lease is the long-term leasing of land only, with the tenant typically constructing and owning the improvements on the property, such as multifamily apartment buildings, office buildings, retail developments, college campuses, power plants, data centers, hospitals, museums, restaurant franchises and industrial warehouse and distribution projects.