What type of lease pertains to a long-term lease of unimproved land typically for construction purposes?

A ground lease is specifically designed for the long-term leasing of unimproved land, often with the intention of constructing buildings or other permanent structures on that land. In a ground lease, the lessee is typically granted the rights to develop the property while the lessor retains ownership of the land itself. This arrangement encourages development by allowing tenants to invest in construction without having to purchase the land outright.

The underlying intention behind a ground lease is to promote development on the property, which is why it is frequently utilized in commercial real estate. At the end of the lease term, any improvements made on the property generally revert to the lessor, thereby ensuring that the landowner retains the value-added through development.

Other types of leases serve different purposes. A net lease could involve additional expenses for the tenant beyond rent, often associated with commercial properties, while a gross lease bundles all expenses into a single rent payment. A built-to-suit lease allows specific construction that meets the tenant's needs but does not exclusively focus on unimproved land, as it can apply to property already having some level of improvement. Thus, a ground lease is uniquely aligned with the objectives of long-term land leasing for construction purposes.