What are "Air Rights," anyway, and why are they so important in Manhattan?

For years, I noticed that they had signs up saying they were going to tear down this old NYC public school in East Midtown, but nothing ever happened..

The last I heard was that they had sold the air rights--see the tall building right behind the school?--that is utilizing these "air rights" to build to a great height than the City would otherwise allow...

The last time I remember a row about "air rights" was how St. Bartholomew's Church in Midtown wanted to sell off its old community house and the air rights above it and the Church, so that developers could build some massive new office tower.

There was a big fight about this first of all between the parishioners of St. Bart's and secondly with the local zoning board, which did not like the idea of all ( the  deal never went through, and St. Bart's remains the same, as seen below)

This was because St. Bart's, like the Central Synagogue and St. Patrick's Cathedral, all lie just outside the zone where  a change in the law would make the sale of their air rights possible.

In the case of St. Bart's, some kind of compromise may be reached eventually because the Church is so badly in need of structural repair....St.Patrick's, which is under renovation, and uses Facebook and Twitter in its bid to raise funds, seems to be doing OK...I don't know what shape the Central Synagogue is in, but it underwent a big restoration some years back and I was under the impression that financially they were fine.

 (They say there is nowhere anybody could go higher up anyway above St. Pat's above--without making an already supertall area sort of ridiculously taller-- I mean, Rockefeller Center is right across the street)..

(And I do not know exactly what the story is with the beautiful old Central Synagogue..but my experience with religious  institutions is that they ALWAYS need more money, even though they don't pay taxes).

Well, let us see what we can find out about all these air rights...I mean, I understand the basic idea of course, but what is going on in the City now, and what are these changes going on?

Yes, instead of Wikipedia this time let us go to a more recent article in the NY Times, which is not a as didactic and a little more dramatic (This article was SO long that I felt it necessary to edit it a little, and I hope nothing too important has been lost).

NY Times explains air rights

By ROBIN FINN

Published: February 22, 2013

Because a room with a view has always been preferable to one without, the price of air in New York City is becoming more expensive. Yes, the air is for sale, but not on sale.

And not the dodgy urban air the city’s eight million inhabitants breathe as they scurry around the boulevards, but the rarefied and fast-disappearing air overhead where condominium towers do not fear to tread, and rooms with sunlit windows can make the lucrative difference between a legal three-bedroom residence and a mere two-bedroom with a den/office. 

With Manhattan’s skyscraper-proof bedrock in finite supply and the city’s fixation on housing and envelope-pushing office buildings on the upswing — and also the impetus behind the proposed rezoning of 70 blocks around Grand Central Terminal called Midtown East — the sky is not only the limit, it’s the solution. Ubiquitous developers-about-town like Gary Barnett, Harry B. Macklowe and the Zeckendorf brothers are all not-so-secret members of the air appreciation society. 

“When I tell people outside of New York that I’m buying air from other building owners, they look at me as if I’ve lost my mind,” said Kenneth S. Horn, the president of Alchemy Properties. His 18-story Isis Condominium at 303 East 77th Street acquired air rights from two adjacent tenements; it cantilevers eight feet above the roofs of both of them beginning at the sixth floor. The payoff for this complex and expensive undertaking is 360-degree views, more spacious apartments, abundant light and higher resale value. 

“If the real estate gods line up,” Mr. Horn said, “and I find a site in a friendly neighborhood where I can and do buy air rights, and then let’s say I can’t build any higher, but if they let me cantilever, I can create views and add square footage to my project.” 

Air rights are, in actuality, not fluffy chunks of available or orphaned air. They are unused or excess development rights gauged, like building density or lot size, by the square foot and transferable, when zoning permits it, from one buildable lot to another. They have become the reigning currency of the redevelopment realm, major components in the radical vertical transformation of the city’s skyline.

These days developers don’t just tailor their blueprints to the lot they own: they often annex, for fees that can run into the multimillions, the airspace above and around their property. The process, essentially an invisible merger of building lots that tranlates into taller, heftier towers with increased profitability, is emerging from a minislump dictated by the economy. 

  “The trading of air rights is more prevalent than it’s ever been before,” said Robert Von Ancken, an air-rights expert and appraiser who is the chairman of Landauer Valuation and Advisory Services, “and it’s why you’re seeing these monster buildings springing up all over town. All of these new supertowers that are changing the look of the city’s horizon, they couldn’t happen without air-rights transfers.” 

“There are people who believe in skyscrapers and people who don’t,” he added, “and you can’t do the Hudson Rail Yards and you can’t do One57 without air rights, but that’s not really the issue. The city Planning Department has taken steps to ensure that the way we sculpt our city is something that makes sense in terms of light and air. The reason behind the big increase in air-rights trades is that, bottom line, they can make the difference between a marginal and a profitable project.”

Post-recession, the air above New York City is its own best marketing tool. 

“It’s coming back with a vengeance,” said Robert A. Jacobs, a land-use specialist and partner at Belkin Burden Wenig & Goldman. “The technology available is such that if you’re a developer of a residential property you should build as high as you can, because you get the higher sales price for the higher floors. The race to accumulate light easements and air rights is tied to the mandate for these high-priced condos to offer views worthy of the purchase price,” added Mr. Jacobs, who lectures on air rights at the city bar association. 

If there is a danger inherent in them, it is the potential, Mr. Jacobs mused, for a city dominated by towers that overshadow the rest of the landscape. 

“Is the future of the city going to be this series of 200-story towers with stultified buildings in between?” he asked. “You wonder how this will affect the street life, the trees. You wonder about urban plazas surrounded by 50-story walls: what would grow there, mushrooms?”

 (MY NOTE HERE--the Islamic Cultural Center up on East 96th Street  was able to sell of air rights some years back to  allow Related Management to build a project called One Carnegie Hill.. (Personally, I am for any deal favoring Related Management because of all it has done to further the cause of Affordable Housing!....And under the new law, some MIDTOWN churches ARE going to be able to sell their air rights. --Midtownblogger, July 2, 2013).

Before 1916, air and light were not an inalienable right of New Yorkers, but since then zoning rules have imposed varying height restrictions on new construction. The concept of air rights, also called transferable development rights (T.D.R.’s), as a salable commodity came about after a 1961 revamping of city zoning regulations that established density quotas for every block.

The restrictions are defined by the ratio of floor area to lot size; the floor-area-ratio (F.A.R.) determines a building’s permissible bulk and varies by zone as well as by its position on a block or boulevard. Corner and boulevard sites have fewer restrictions than side streets, particularly in matters of height. 

As Donald J. Trump demonstrated with his 72-story black glass tower at 845 United Nations Plaza, which was at one time the tallest residential building in the city, it is possible for a tower to, well, tower over its neighbors if it has successfully transferred sufficient air rights. Mr. Trump performed a dominolike maneuver and legally stockpiled air rights from at least seven low-rise properties that had F.A.R. to spare, merging their lots with his. Then — presto — he maxed out the block’s allowable density in the form of a single slender tower. 

Controversial when it was built, Trump World Tower has its defenders. “You could subscribe to the theory that towers like these are the Empire State Buildings of the 21st century,” said Joshua Stein, a prominent commercial real estate lawyer. 

Supply and demand dictate the price of air rights: 20 years ago, $45 a square foot was considered a reasonable fee, but in recent years the norm in prime neighborhoods has crept toward $450 a square foot. 

According to one real estate professional, along the High Line corridor, a 21st-century development-rights hot spot, the air rights of a low-rise building desired by a high-rise condominium traded for more than the land beneath it. 

“There’s a price on everything in New York, and the air is no exception,” said Ross F. Moskowitz, a partner at Stroock & Stroock & Lavan who specializes in land use and zoning. “From the viewpoint of real estate, air is simply invisible land, because you can build on it. Sometimes the air above, behind, to the left or right is worth far more than the building that carries the rights to it; it’s a potential pot of gold for many properties. It’s found money.” 

Think of One57, the unfinished Midtown juggernaut that soars 90 stories above 57th Street; two duplexes there have already sold for more than $90 million each. Its developer, Gary Barnett of Extell, who is generally considered the grandmaster of the chess game that empowers air-rights assemblages, spent more than 15 years, and umpteen millions, buying up unused air rights from a string of smaller properties surrounding his tower. His objective: vertiginous height accompanied by this city’s notion of priceless perfection: enhanced Central Park views.

One of Mr. Barnett’s stops along the way to piling up the mountain of air rights that helped make his trophy tower possible was Joyce Manor, a 10-story prewar co-op at 140 West 58th Street. When Amy Casey moved into a tiny penthouse there in 2004, she was told that it came with air rights attached; she envisioned someday expanding her 600-square-foot space, perhaps creating a duplex with enhanced views of Carnegie Hall. She found out her air rights were worthless in terms of personal expansion: zoning did not permit it. But the aggregate air rights owned by the co-op were salable, and Mr. Barnett was buying.

 

“I owned something that was worthless to me,” said Ms. Casey, a vice president of Halstead Property, “but when One57 came along, we sold our air rights to Gary Barnett just like every other midrise on the block. I didn’t get money in my pocket, but our co-op got $5 million, so it was a win-win in the end.” Well, not quite. “Now One57 blocks my view of Carnegie Hall.”

For a new TriBeCa condominium development of somewhat less gargantuan proportions, the Warren Lofts, an 11-story building at 37 Warren Street, Sonny Bazbaz, the president of Bazbaz Development, found himself suddenly in need of an additional air and light easement. 

Mr. Bazbaz bought the building, which was in foreclosure, for $15.5 million in 2011; his plan was to offer 14 apartments in the original seven-story loft building and four floor-through three-bedroom penthouses in an ultramodern four-story addition perched on the roof. 

But when he approached the Department of Buildings about marketing his penthouses, he was informed that three of the four were ineligible as three-bedroom units because bedroom windows faced a lot line and could, technically, end up being blocked by a wall. So he needed more air rights, and fast. 

“Three-bedroom apartments sell at a premium in TriBeCa,” Mr. Bazbaz said, “and besides, who really wants a two-bedroom penthouse? I had thought the previous transfer of T.D.R.’s from a building at 37 Murray included the light and air easement, but it turns out it hadn’t.”

He went to 37 Murray with an offer of $80,000 and was rebuffed. “They told me they wouldn’t sign anything for less than a million dollars,” he said. “So I took a look at 41 Murray, which is adjacent to the rear of 37 Warren.” 

End of story: he got the easement for $400,000 and an unexpected bonus. He was able to apply the easement to nine units that had bedroom windows facing 41 Murray, which agreed not to build taller and block them. 

Mr. Shapiro of City Center Real Estate has negotiated both sides of air-rights transfers for nearly 50 years. “It can be very much like playing three-card monte,” he said. “Air rights are like the tail wagging the dog, and to understand them, you’ve got to understand every nuance of New York City zoning.”

Air rights are generally worth nothing unless a developer wants to buy them. And apartment owners often don’t own unused air rights; they are more likely controlled, if they exist, by the co-op or condo corporation that runs the building. 

Robert I. Shapiro, an air-rights expert, has cautionary words for anyone who thinks he or she has excess air rights to sell: hire a real estate adviser. Supply and demand determine their worth, and transfers are complicated by a raft of zoning rules governing building height, density, setbacks and other technicalities. According to Joshua Stein, a real estate lawyer, it is usually the developer who approaches sellers after conducting a zoning analysis of potential supply sites. In some neighborhoods, height and density restrictions make significant air-rights transactions unlikely.

Invisible, Yet Buildable

 

Ross F. Moskowitz, a lawyer who specializes in land use and zoning cases, tells sellers never to part with 100 percent of their air rights, no matter how enticing the price.

“I always recommend to my clients that they keep some back, say 150 square feet or so,” he said. “You never know when you might need to make some adjustment to your building, but once you sell air rights, they’re gone forever.” 

This article has been revised to reflect the following correction:
Correction: March 3, 2013

The cover article last Sunday about the buying and selling of air rights in New York City described the developer of 56 Leonard Street incorrectly. The Alexico Group is developing the building in partnership with Hines — not alone.