A ground lease in commercial real estate is a long-term lease (typically 50-99 years) where the tenant leases land from the owner and builds on it. The tenant owns the improvements (buildings, infrastructure) but not the land. At the lease’s end, ownership of the structures may revert to the landlord unless otherwise agreed. Ground leases are common for retail centers, office buildings, and industrial properties, allowing businesses to develop prime locations without high upfront land costs.
Ground Lease in Commercial Real Estate – Examples
A ground lease is often used when government bodies, trusts, or large organizations lease land to developers due to a lack of funds or management capacity to develop and operate properties themselves. Some common examples include:
Government-Leased Properties:
- Railway Stations & Land – Railways lease land to private developers for commercial complexes.
- Bus Terminals – Governments lease land for shopping malls, offices, and hotels integrated with transportation hubs.
- Parking Lots & Transit-Oriented Developments – Municipalities lease land for multi-level parking and mixed-use projects.
Institutional & Trust-Owned Land:
- Educational & Religious Trusts – Universities and religious institutions lease land for commercial projects like retail spaces or hostels.
Airport & Seaport Leases:
- Airports lease land for hotels, cargo terminals, and retail spaces.
- Ports lease waterfront land for warehouses and logistics hubs.
Such leases unlock land value while ensuring sustainable development without ownership transfer.
Read More about Commercial Lease