Why Ground Leases are Gaining Momentum in Manhattan's Market
Ground leases are experiencing renewed interest as family offices and institutions seek stable, inflation-protected income streams in an uncertain rate environment.
In a market where cap rate uncertainty and debt costs have complicated traditional acquisitions, ground leases offer something increasingly rare: predictable, long-term cash flows with built-in inflation protection.
The Current Environment Favors Ground Leases
With treasury yields elevated and lender requirements tightening, the spread between ground lease yields and traditional investment returns has compressed. For landowners, creating a ground lease can unlock value without selling an irreplaceable asset.
Who Benefits Most
- Family offices seeking generational wealth transfer strategies
- Institutions looking for inflation-hedged income
- Developers who want to reduce upfront capital requirements
- Land-rich entities seeking to monetize without disposition
Key Deal Structures We're Seeing
Recent transactions show creativity in escalation mechanics, with CPI-linked increases gaining favor over fixed schedules. Subordination provisions are also evolving as lenders adjust to higher rate environments.
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