The Johnson Development Corp. is a Houston-based residential and commercial land development company that has over 40 years of experience in the real estate development business. For more information visit http://www.johnsondevelopment.com
It's not news that one of the hottest commodities on the market today is commercial property. Developers and investors in Houston are scrambling to acquire land that is almost guaranteed to increase in value, many retailers and commercial developers are overlooking the advantages of developing and building on property that they don't own.
Municipal ground leases have a long history. It's not unusual for a city or town to lease land to educational institutions, for instance, retaining ownership of the land while giving the lessee the control needed to make improvements to the property. Those leases generally run for terms of 99 years, and often carry nominal lease fees. The advantage to the city is clear - they are home to an institution that adds value to the community, increasing the value of other real estate and making the community a more desirable place to live. The lessee also gains an advantage - they don't need to purchase the land on which they sit.
Terms tend to run for much shorter lengths of time - as short as 5 years, though 30 year terms are common for a ground lease for sale. The advantages of these leases is for the landowner - the landowner retains ownership of the land and ensures a steady income from the rent paid on the property. In addition, ground lease terms often specify that improvements to the property revert to the owner at the end of the lease term. But what advantages are there for the tenant in a ground lease arrangement?
- Frees capital that would be paid for land acquisition
Since there's no need to finance the acquisition of the land, the developer/lessee has more capital available for building and construction.
- Ground lease payments offer a tax advantage
Lease fees can be deducted as a business operating expense on taxes, reducing the tax burden on the lessee. The lease fees will nearly always be a greater deduction than interest paid on a commercial mortgage, and the lessee will not be responsible for tax payments on the land.
- Lessee is protected from downturns in the real estate market
The real estate market is volatile. A lessee's investment in a ground lease commercial property is not dependent on the increasing value of the land. Rather, their retail or commercial activities provide added value.
As with any real estate transaction, there are both pros and cons to taking on a ground lease for sale. Houston residents, a great deal depends on the terms of the lease and its flexibility. It is definitely an option worth considering, however, particularly in an area where outright purchase - as in master planned communities - may not be an option. The opportunity to enter into a long-term ground lease with the owners/developers of a major master planned community can offer the flexibility and benefits needed for a successful retail operation with a ready market of both consumers and employees.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Interpreting Benefits of Ground Lease for Sale in Houston
- Getting a Ground Lease in Houston Texas
- Advantages of Commercial Ground Lease Properties
- Commercial Development in Houston
- Buying The Best Houston Land For Sale
- Commercial Property in Houston Texas
- Finding Commercial Real Estate in Houston
- Unbiased Opinions About Commercial Land for Sale in Houston
Stepping Stones to a Short Sale
By: Greg Smith | 10/11/2009When people find themselves in the horrendous position of having to give up their home due to a financial crisis, the thought of foreclosure is extremely stressful. But there is one solution that may take some of the sting out of such a loss – the short sale, or pre-foreclosure sale.
Five Easy Tips for Year-Round Curb Appeal
By: Greg Smith | 10/11/2009One of the first things you can do is take an objective look at your house, both your yards - front and back, and assess how your house fits in with the neighborhood in general. Do some sections of your exterior need updating? Are there obvious areas in need of repair, such as fence slats or roof tiles?
Homes you can afford on the waterfront and close to Atlanta
By: Earl Hider | 10/11/2009Country Living doesn't get any better than this and it is just 30 minutes from downtown Atlanta. This is about the best kept secrets in the Atlanta Area A cozy private lake located at the corner of Gwinnett, DeKalb and Rockdale Counties is beautifully tree lined, and covers 96 acres.
Miami Rental Property Tips – Choosing a Roommate for Cost-Effective Leasing
By: Mark Ferrer | 10/11/2009Most of us want to have a share in the pie and some want it all to themselves, whatever that pie may be. But when it comes to the rental pie, sharing it with another will be probably more beneficial. Leasing a Miami rental property can be frustrating and expensive especially if it’s your first time. What is more frustrating is choosing the wrong roommate to share it with. So before you make the mistake of choosing a complete antithesis, or worse, your best friend, here are some tips to remember.
Fort Lauderdale Foreclosures – Helping Your Neighborhood Resist Devaluation
By: Mark Ferrer | 10/11/2009Foreclosures are not only devastating for the property owner but for the neighborhood as well. In the current economic crunch, it’s typical for some people to experience dire financial straits and lose their home to foreclosure. In Florida alone, there are several distressed homes including Fort Lauderdale foreclosures. There are, fortunately, ways that can help your neighborhood avoid devaluation, which is the common mass effect of the foreclosure plague.
Add Value to Miami Luxury Homes with a Deck
By: Mark Ferrer | 10/11/2009Giddy about staging your home? Or are you just looking for a way to invest on a future home sale? If so, there are many projects you can do in order to improve the value of your Miami luxury home, for instance. You should, however, think of the projects as investments and make sure that you’ll be able to recoup the costs once the property is being sold. Without going overboard, adding a deck will prove to be a financial boon in your future as a home seller. Here are some reasons why.
Five Ways of Dealing with Miami Condos Delinquents
By: Mark Ferrer | 10/11/2009Whether you’re the owner of the Miami condo or a member of the board, it’s tough to deal with delinquent condo owners; tougher still the job of an association board member. You and your group are responsible in ensuring that everything within the building is operational; and to do this, you have to collect monthly fees, which can be difficult if your neighbors refuse to pay their dues. Continuous delinquencies can pull down the entire association and building into financial plight.
Buying a Miami Real Estate Property? Know the Common Closing Costs in the City
By: Mark Ferrer | 10/11/2009Savvy homebuyers know how to budget and save money for all the costs and unexpected expenses associated with buying a home. There is nothing more disastrous in home-buying than getting caught off-guard with unforeseen closing costs. When you’re buying a Miami real estate property, whether a condo, detached home or commercial, you should know just what types of closing costs are there in the city or in the entire South Florida, for that matter.
New Homes Quickly Establishing Top Subdivisions
By: Tim Dillard | 25/12/2007 | Real EstateIf you are seeking out the best new places to live in Texas, then the world-renowned Houston is the city to start with.
Area Homes Provide For Residences
By: Tim Dillard | 25/12/2007 | Real EstateLeague City area new homes provide residences one of the fastest-growing areas of Gulf Coast Texas.
Moving to Galveston County Along Texas Gulf Coast
By: Tim Dillard | 25/12/2007 | Real EstateIf you are planning to move to the Texas Gulf Coast, then you should be looking at the multitude of luxury homes available to you.
Surrounded By The Best County Neighborhoods
By: Tim Dillard | 23/12/2007 | Real EstateWhen it comes to finding yourself surrounded by the best neighborhood in Texas, there are several things that you are going to want to think about.
Area New Homes Are Focal Points
By: Tim Dillard | 23/12/2007 | Real EstateI love a Texas drawl; in fact, the accent alone would be enough to make me move to the second-largest state in the union.
Advantages of Commercial Ground Lease Properties
By: Tim Dillard | 10/12/2007 | Real EstateIt's not news that Houston commercial property is one of the hottest commodities on the market today.
Shopping Center Developer Taking Advantage of Commercial Development Houston Offers
By: Tim Dillard | 10/12/2007 | Real EstateSuburban properties and commercial development Houston properties in metropolitan areas are in huge demand.
Commercial Development in Houston Suggests Strong Market
By: Tim Dillard | 10/12/2007 | Real EstateAs we move into the fourth quarter of 2007, the Houston real estate market is slowing mildly but it remains strong in comparison to the national numbers that have been fore-casted.