How Ground Leases Enable Developments to Move Forward

Dean Britton is a New York City professional who oversees complex ground leasing arrangements involving buildings’ residential and retail components. The foundation of Dean Britton’s business is the understanding that many development projects funnel money into two very different types of investments.

All buildings sit on land, which typically presents a predictable, low-risk/low-return proposition. By contrast, what building owners do with a property (how they rehabilitate and position it) presents a high-risk/high-reward scenario. Many real estate projects encompass these two elements: the volatile building development and operation side, as well as a lower-yield land component.

With ground leases, developers do not purchase land, but instead lease it from the landowner, usually for a 99-year period. When the lease comes to an end, all improvements undertaken by the developer transition to the landowner. This enables families and institutions to make an income from land without having to sell it. At the same time, developers find their capital-raising needs substantially reduced, particularly in sought-after urban areas such as Manhattan.

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