Ground Leases in Lafayette & Tippecanoe County: A Guide for Investors

When people think about investing in commercial real estate in Lafayette or West Lafayette, they often picture buying an office building, retail strip center, or industrial warehouse. But in many cases, the most valuable part of a deal isn’t the structure at all—it’s the land beneath it.

That’s where ground leases (also called land leases) come in. In Tippecanoe County, ground leases are becoming a popular tool for structuring deals that create long-term value while reducing upfront costs.

If you’re a prospective investor exploring the Greater Lafayette commercial real estate market, it’s worth understanding how ground leases work—and where they might benefit you both in the short term and over the long run.

What is a Ground Lease?

A ground lease is an agreement where a landowner leases their land to a tenant, usually for a long period (20–99 years). The tenant then has the right to build, operate, and generate income from improvements—such as restaurants, gas stations, retail centers, or office buildings—while paying rent to the landowner.

At the end of the lease term, ownership of any buildings or improvements usually reverts back to the landowner.

In short:

• The landowner keeps the land and collects predictable rent.

• The tenant saves upfront capital by leasing land instead of buying it, freeing resources to build and operate the business.

Why Ground Leases Work in Greater Lafayette

The Lafayette/West Lafayette area is a strong candidate for ground lease activity. With Purdue University, a growing population, and steady job creation, demand for commercial sites remains high.

Ground leases are especially useful in high-traffic, high-visibility locations where land is scarce but valuable, including:

• I-65 interchanges – popular for travel plazas, hotels, and fast food.

• State Road 26, State Road 38, and Sagamore Parkway corridors – strong retail and service demand.

• West Lafayette near Purdue University and Purdue Research Park – limited land, strong business demand.

In these cases, landowners may not want to sell outright but will consider a land lease that generates steady income while retaining ownership. For investors, this can mean securing a prime location in Lafayette at a fraction of the upfront cost.

Types of Ground Leases

Two common types exist in Indiana commercial real estate:

1. Unsubordinated Ground Lease

   • Landowner retains priority.

   • Lenders cannot foreclose on the land if the tenant defaults.

   • Safer for landowners; common in high-demand Lafayette locations.

2. Subordinated Ground Lease

   • Landowner’s interest is secondary to tenant’s lender.

   • Helps tenants secure financing for improvements.

   • Higher risk for landowners, but often means higher rent.

Benefits for Landowners in Tippecanoe County

For landowners in Lafayette, West Lafayette, or the surrounding towns, a ground lease can provide:

• Reliable Income Stream – Rent payments for decades.

• Ownership Retention – Hold onto valuable land near growth areas.

• Estate Planning Tool – Land plus income can be passed to heirs.

• Long-Term Value – When the lease ends, you often gain the building too.

Benefits for Tenants & Investors

On the tenant/investor side, a land lease in Tippecanoe County means:

• Lower Upfront Investment – Avoid land purchase costs.

• Prime Location Access – Operate in high-demand Lafayette/West Lafayette corridors.

• Business Flexibility – More capital left to build, expand, and operate.

• Tax Efficiency – Lease payments often deductible as expenses.

Short-Term vs. Long-Term Mindset

Short-Term (5–10 Years)

• Lower initial costs for starting or expanding businesses.

• Faster ROI since less capital is tied up in land.

• Easier expansion into multiple Lafayette-area locations.

Long-Term (20–99 Years)

• Landowners build wealth through appreciation.

• Tenants may negotiate extensions for continued operations.

• Improvements revert to the landowner at lease end.

• Ground leases often include rent escalations, helping hedge against inflation.

Local Applications in Greater Lafayette

In Tippecanoe County, ground leases are especially common in:

• National chain tenants at I-65 exits (restaurants, gas stations, hotels).

• Retail near Purdue University, where land values are high and sales demand is strong.

• Medical/professional buildings along Creasy Lane or near IU Health Arnett and Franciscan Health hospitals.

• Industrial and logistics facilities supporting Lafayette’s manufacturing growth.

Risks to Consider

For landowners:

• Long-term lease limits flexibility.

• Subordinated leases add financial risk.

For tenants/investors:

• Loss of improvements at lease end.

• Financing challenges if the lease term is shorter than the loan.

• Escalating rent obligations.

Wrapping it Up

In Lafayette, West Lafayette, and Tippecanoe County, ground leases can unlock prime sites that might otherwise be out of reach. For landowners, they provide predictable long-term income while preserving ownership. For investors and tenants, they create opportunities to operate in strategic locations without the upfront burden of land acquisition.

Whether you’re holding land near an interchange, exploring opportunities close to Purdue University, or considering a long-term investment strategy, a ground lease in Greater Lafayette can be a smart tool when structured correctly.

📌 If you’re exploring land lease opportunities in Lafayette or Tippecanoe County—or want to discuss off-market deals—feel free to connect. I’d be glad to share insights tailored to your investment goals.