A ground lease separates the land from the building on it, and in Manhattan it is one of the oldest structures owners have. Multigenerational families use it to collect rent on land they never intend to sell; institutional capital uses it for durable, long-dated income.
What a Ground Lease Actually 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 Properties Approaches Ground Leases
We start with what the owner actually needs (steady income, a tax result, a legacy plan, or liquidity), draft the structure around it, and then test every term against what a leasehold lender will finance and what comparable ground leases have traded at.