How Do Air Rights Work in NYC Real Estate in 2023?
Go Back To Previous PageWhen you have a place like New York City, everything has a protocol, a fee, or even a particular process or concept. Even something along the lines of air or “space above” can have a specific way of being parsed. That’s why air rights in NYC are a thing, but what does this mean in the Big Apple? Air rights are the space above your apartment building or condo. Like how companies treat carbon emissions rights, entities can buy or sell air rights. Only a set number of those rights are available for each part of the city. If you are a building owner, it makes sense to understand what these rights offer you and how developers can use them. You might be shocked to hear the truth about NYC’s city planning! How to buy air rights in NYC?
What Are Air Rights?
Air rights in NYC refer to the space above or around a building used for development. If a building is 50 feet tall but could be as high as 75 feet, the unused 25 feet are referred to as unused development rights or air rights. The owner of this building could potentially add additional stories or sell their unused airspace to an adjacent building which would then be allowed to construct a taller building by combining the development rights from both lots.In the olden days, New York City was all about building upwards rather than outwards. The problem is, this isn’t good in large quantities.
Building too high up all over the place would make the city unbearably dense, not to mention significantly darker. People balked, so they came up with the concept of air rights in NYC.
Air rights are rights over the space above your apartment’s rooftops. In New York, this includes the right to develop a building upwards, and each area receives specific rights, transferrable from building to building.
How Are Air Rights Typically Determined?
Air rights are a combination of things; the most critical factor is the Floor-Area Ratio.
What is the Floor-to-Area Ratio (FAR)?
The Floor-to-Area Ratio refers to the maximum square footage that can be built on a lot relative to the square footage of the lot. FAR is calculated by dividing the total floor area of a zoning lot by dividing it by the lot area on the single zoning lot. For example, a building with 25,000 SqFt on a lot with a lot area of 5,000 SqFt has a FAR of 5 (25,000 SqFt / 5,000 SqFt). Permitted FAR varies by zoning district, location, and building use. This is how much floor space you have compared to your lot’s area. In some districts, people are given less area than in others.Air rights are essential for developers, multi-use property owners, townhouses, condo and co-op buyers and sellers, and real estate brokers. They are also referred to as Unused Development Rights, Excess Developments, Transferred Development Rights, and Available Development Rights.
Air rights are determined by applying the Zoning Resolution to a zoning lot.
How Can You Tell If Your Property Could Be Further Developed?
New York City is pretty fussy about how your can develop your buildings. Because air rights are such a hot topic in this city, the government went so far as to create a regularly-updated map that illustrates where those rights
currently rest and where buildings got marked as “totally done.”
For an existing building, the amount of unused development rights equals the maximum amount of gross floor area permitted in the zoning lot where the building is located minus the amount of floor area utilized by the existing structure(s).
The Zoning Resolution (ZR) of the City of New York determines the extent of permitted development rights for each zoning lot. Specifically, the Zoning Resolution regulates the size, height, setbacks, lot coverage, and yards of buildings and other structures in NYC.
How Are NYC’S Air Rights Transferred?
Honestly, it’s not like you can sell your rights the way that most people would oil rights. There are three standard methods by that air rights in NYC get transferred. Each has its process, often assisted by lawyers:
- Zoning Mergers. These occur when two building owners decide to join their property into one contiguous area. When this happens, their air rights are compounded. So, instead of two 6-story additions, they could make one sizeable 12-story addition.
- Special Purpose Transfers. These occur when building owners from non-connected buildings transfer their rights to create a particular interest tower or similar usage item. For example, this was a thing for the Hudson Yards.
- Landmark Transfers. If you want to be a socialite and create a new landmark, you can do a landmark transfer. This allows you to sell your air rights, so the landmark gets built, often as an act of generosity.
How Are Air Rights in NYC Labeled?
Those rights show how many more square feet you can add to the top of your building. So, if every floor is 10,000 square feet, those rights that total 20,000 square feet would allow you to add two more floors to the top of your building.
How Much Do Air Rights Cost?
Citywide, air rights currently cost $225 per square foot. However, the price in your area can be exceptionally pricey or cheap, depending
on the local land costs.
This can be as pricey as $400 and up on the Upper East Side or at little as $100 per square foot.
It’s worth noting that most parts of the city will have more expensive airspace than the actual floor space. This is because the potential for development often comes at g a premium price.
Other documents required to effectuate a transfer of unused development rights include:- Declaration of Zoning Lot Restrictions
- Zoning Lot and Development Agreement (ZLDA)
- Title Company Certification
- Zoning Lot Description and Ownership Statement by Building Department Applicant
- Department of Buildings – Plan/Work Approval Application
Is It Possible To Get More Air Rights In New York City?
Maybe soon. The NYCHA currently owns the lion’s share of the air rights, and over 80 million square feet of unused, unsold air space are part of NYCHA’s holdings. New York might see many of those square feet used in transactions depending on how things go.
How to buy air rights in NYC?
The release of that air space is part of the city’s 10-year plan to encourage expansion and innovation and improve the rent crisis. Whether or not this will bode well for the city depends on many factors. However, it’s safe to say that we’ll see building up pretty frequently.
How Do You Know How Much Air Rights A Building Has In NYC?
This is tricky, but there’s some good news. Air space is all documented as a part of a building’s materials. So, when a listing occurs, the agent has to search for building rights.
Similarly, to sell building rights, you may need to talk to a brokerage or a real estate lawyer to do so.
