Ground Leases 101: Complete NYC Guide
A practical overview of ground lease structures in New York City, with key economics, negotiation levers, and common pitfalls for both lessors and lessees.
Ground leases are a core Manhattan structure for separating the land from the improvements. For multigenerational owners and institutional capital alike, the structure can create durable income while preserving long-term land ownership.
What a Ground Lease Really Does
A ground lease typically transfers development and operating control of the improvements to the tenant while the land remains with the lessor. The economics hinge on ground rent, escalation mechanics, and how resets (if any) are drafted.
Key Terms That Move Value
- Initial ground rent and how it is determined (often tied to land value and a rent factor).
- Escalations (fixed, CPI-linked, stepped schedules) and caps/floors.
- Rent resets: appraisal mechanics, timing, and the definition of land value.
- Subordination and financing provisions that affect liquidity.
- Reversion language and end-of-term outcomes for both parties.
How Skyline Approaches Ground Leases
The best outcomes come from aligning structure to the owner’s goals (income stability, tax planning, legacy, or liquidity) and then pressure-testing terms against financing and market comparables.
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