How does “build to suit” land leasing work? If structures are built on leased land, aren’t they then owned by the lessor after the lease period ends? What is the advantage of this arrangement?

Question

How does “build to suit” land leasing work? If structures are built on leased land, aren’t they then owned by the lessor after the lease period ends? What is the advantage of this arrangement?

In: Other

Answer 1

yes, the structure is owned by the lessor. but commercial leases typically run 10/20/30 years. and any costs of initial construction might be fully paid by the lessor (and recouped back in the lease payments) or the lessee might even contribute to the cost of building the initial structure. same thing when you lease an empty building, lessor/lessee negotiates terms for the initial build up or renovation.