Author: Christopher A. Manning

Start Page: 79
End Page: 86
Volume: 6
Issue Number: 1
Year: 1991
Publication: Journal of Real Estate Research

Abstract: This article reports the informal research findings from personal interviews with more than thirty corporate real estate executives in regard to leasing corporate operating space while retaining an equity interest in the residual value of the leased property. There appears to be general agreement among "excellent" corporate real estate executives that occupancy costs can often be reduced through leases with equity interests below what is generally possible with either (1) a straight lease of space or (2) an outright purchase (i.e., borrow to buy). Four reasons discussed with corporate real estate executives for the increasing use of leases with residual equity interests are reviewed. Finally, theoretical support is suggested for why such leases, rather than being just the outgrowth of the current corporate space glut, may actually reflect a long-term trend in the way large companies "finance" operating space needs.