Safehold's Ground Lease Model Recognized for Affordability
Safehold Inc. (NYSE: SAFE), a company specializing in modern ground leases, was named a finalist for the 2026 Ivory Prize for Housing Affordability. The prize recognizes innovations that help address the housing crisis. Safehold's model separates the ownership of land from the building, aiming to reduce the overall cost of real estate for owners and residents.
- A key benefit of a ground lease is the reduction in upfront capital required, allowing developers and investors to allocate funds to construction and other costs rather than land acquisition. This capital efficiency can lead to higher returns on investment. For tenants, rent payments on ground leases are often tax-deductible. - In the Midwest multifamily market, cap rates have dipped slightly in 2025 to an average of 5.7%. Chicago's multifamily market remains strong with a low vacancy rate of 4.7% and a 3.8% rise in rents. The average cap rate in Chicago for multifamily properties was 6.7% in the third quarter of 2025. - For those looking to enter the real estate investment field, firms in Chicago typically seek candidates with 2-4 years of experience in commercial real estate, finance, or accounting, and strong financial modeling and analytical skills. A bachelor's degree in real estate, finance, or a related field is often required. - Institutional investors hold a smaller portion of multifamily assets in the Midwest (around 6%) compared to their national portfolio, despite the region containing about 20% of the U.S. rental housing stock. This suggests potential opportunities for private investors in a less saturated market. - Aspiring investors can learn from the success of local entrepreneurs like Ron Abrams, who built a portfolio of over 1,500 units across more than 120 buildings on Chicago's north and northwest sides. Another example is Tom Scott, founder of CA Ventures, who grew his company from a small student housing developer into a firm with a multibillion-dollar international portfolio. - To stay informed, Chicago real estate professionals frequently read publications like *Crain's Chicago Business* and its *Chicago Real Estate Daily*, as well as *Bisnow Chicago*, and *Midwest Real Estate News* by REJournals. - Safehold (NYSE: SAFE) is a publicly traded REIT, and as of early 2026, analyst ratings are mixed, with a consensus "Hold" rating. The consensus 12-month price target for the stock sits around $17.75-$19.00. - The ground lease model is being applied to affordable housing development, where it can help bridge budget gaps for developers. By leasing the land, developers can lower their overall project costs, which can make more affordable housing projects financially viable.
