Most cooperatives and condominiums in New York City traditionally own both the building and the land around it. There is, however, a real estate scenario where the cooperative (and in rare instances, the condominium) owns the building, but not the land on which it sits.
This situation is what’s called in real estate parlance “a ground lease,” where the co-op typically has a long-term lease on the property, from 30 or 50 to more than 100 years in many cases. In this instance, the building sponsor leases the land, sometimes from the City of New York, or sometimes from an adjacent business, third party developer or even a religious institution. This ground lease sets the terms of the lease; the length of the lease, the renewal terms and the rent payable under the lease.
Real estate lawyers often shy away from this scenario and buyers sometimes are caught unaware or are wary about committing to such an arrangement, according to Jacky Teplitzky, a real estate broker with Prudential Douglas Elliman.
Some notable buildings with ground leases include Battery Park City, the Excelsior at 303 East 57th, the Trump Plaza at 167 East 61st Street, the Sovereign at 420 East 59th Street, One Carnegie Hill, a condop at 215 East 95th Street, 385 East 67th Street, and 150 East 61st Street, to name a few. There are roughly 100 ground lease co-ops in the city and Battery Park City may be one of the only neighborhoods in Manhattan where the majority of buildings have them.
Teplitzky is a broker familiar with several buildings in this situation, namely the Azure, a new construction at 333 East 91st Street, the Excelsior, One Carnegie Hill and several residences at Battery Park City, for instance. She recently held a standing-room-only seminar explaining the advantages and/or potential drawbacks of buying into a land leased building.