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

The advantage to the lessee is that you get the exact building you want. The advantage to the lessor is that you get a lessee that’s more “locked in” to the specifics of your building and thus likely to be a long-term tenant.