Every lease is different, but most are lengthy, extending 99 years or more. Ruth Fremson/The New York TimesĬo-op owners in land-lease buildings must also confront lease expirations. The land rent at the Excelsior, 303 East 57th Street, will reset in 2018. With prices rising, particularly along 57th Street, where a dozen luxury towers are underway, shareholders are growing anxious that the land rent could rise precipitously. According to the terms of its lease, every 10 years the rent resets to 6 percent of the value of the land. The Excelsior, a land-lease co-op at 303 East 57th Street, is facing a potential rent increase. But if they do, it is in their best interest to do so if at all possible.” “There are many co-ops on ground leases and it is rare that shareholders get a chance to buy the land. “All over Manhattan, land values are escalating at a very rapid pace,” said Brian Corcoran, an executive vice president of Cushman & Wakefield who advised the Trump Plaza board on its land purchase. Many land-lease buildings pay the landowner rent based on a percentage of the value of the land. In recent years, as the price of land surged to historic levels, some owners of land-lease apartments began biting their nails. Some landowners decided to keep the land, rather than sell it to a developer, in order to maintain a rental income for themselves and their heirs, said Adam Leitman Bailey, who practices real estate law in New York. In New York, many land-lease co-ops date to the late 1960s and early 1970s, when the market was strong and there was a housing shortage. Saft, a partner at the law firm Holland & Knight. Many buildings in London are subject to ground leases that can run for 1,000 years the queen is often the landowner, said Stuart M. Land-lease buildings aren’t unique to New York. He had a buyer who recently fell in love with an apartment at the Beekman, a land-lease co-op at 575 Park Avenue. “The value of the apartments decrease because the maintenance is so obnoxiously high,” said Robert Dankner, the president of Prime Manhattan Residential. “This unit would probably be $8 million if it wasn’t a land lease,” she added. Abrams lives at 190 East 72nd Street, a land-lease co-op, and is marketing a four-bedroom there for $4 million, with a monthly maintenance fee of $14,000. “Discounts in land-lease buildings are 25 percent, although I’m beginning to think it is more like 35 to 40 percent,” said Susan Landau Abrams, an associate broker at Warburg Realty. On the other hand, land-lease apartments tend to cost less than the competition. And as the co-ops do not pay real estate taxes, shareholders cannot deduct as much from income taxes as shareholders in typical co-ops do. These buildings tend to have high monthly carrying charges because of the rental payments for the land. They are mostly co-ops, although the list includes some condominiums. Approximately 100 buildings in Manhattan have land or ground leases, according to several people in the real estate industry.
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