Property type

Ground Lease Outparcel

Ground lease outparcel properties represent unique investment opportunities for 1031 exchange investors seeking land-focused investments. These properties typically involve ownership of the land with the tenant owning or leasing the building improvements. Outparcels are located adjacent to major retail centers, benefiting from established traffic patterns and co-tenancy.

Ground lease properties offer distinct advantages including ownership of appreciating land, lower management requirements, and potential for future redevelopment. In Austin, TX, ground lease outparcels benefit from the region's strong retail market and population growth.

Investment benefits

Why Ground Lease Outparcel for 1031 Exchange

1Land ownership with appreciation potential
2Low management requirements
3Long-term lease structures
4Future redevelopment potential
5Prime retail locations

Market data

Ground Lease Outparcel Market Overview

Typical Cap Rate

4.0% - 5.5%

Typical Lease Term

20-50 years

Common Tenants

Various QSR, Banks, Drug Stores, Fast Casual

What is a ground lease investment?

A ground lease investment involves owning the land and leasing it to a tenant who owns or constructs the building improvements. The investor collects rent from the land while the tenant is responsible for the building and all operating expenses.

Why are ground leases attractive for 1031 exchanges?

Ground leases are attractive because they provide passive income with minimal management requirements, long-term lease structures, and ownership of appreciating land. At lease expiration, the land and any improvements revert to the landowner.

What are the risks of ground lease investments?

Ground lease risks include long-term lease structures that may not keep pace with inflation, tenant credit risk, and potential challenges if tenants vacate. However, strong tenants with inflation-adjusted rent increases can mitigate these risks.

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