A land tenure arrangement common in major metropolitan areas like Chicago separates ownership of the underlying land from ownership of the buildings and improvements upon it. The landowner grants a long-term lease, often lasting decades, to a tenant who then has the right to develop, use, and profit from the property. For instance, a developer might secure a 99-year lease on a parcel of land in the city center to construct a high-rise building. The developer owns the building, but the land itself remains the property of the original landowner.
This arrangement offers distinct advantages for both parties. Landowners receive steady, long-term income streams without the responsibilities of property management. Developers gain access to prime locations, often at a lower initial cost compared to outright purchase, allowing them to allocate more capital toward development. Historically, this model has fueled significant urban growth and facilitated large-scale projects, shaping cityscapes across the country. The practice has become particularly prevalent in dense urban environments where land values are high.
