Decades ago, if you had offered to sell some water to someone, she would have questioned your sanity. After all, water was free. But then, Poland Spring came along, Perrier become more popular, and the rest is history.
If water can be sold, why not air?
The current price of air is as high as $450 a square foot.
NYC’s zoning laws made air increasingly valuable. Trying to prevent an overload of skyscrapers, New York mandated that certain churches and historic dwellings and even neighborhoods remain somewhat horizontal. It all relates to a zoning concept that was initiated in 1916 but then took a quantum leap into the market system in 1961 when the concept of transferable development rights was created. T.D.R.s monetized the air above a building. Building owners who could not or would not add floors could sell that square footage to their neighbors.
One developer said they were selling invisible land.
Soon, people realized that by accumulating air rights from multiple buildings, they could go higher and higher. At 72 stories, a Donald Trump structure was, for awhile, NYC’s tallest residential building because of the huge amount of air square footage he had amassed. Planning a 90 story dwelling, one developer took 15 years buying the air rights he needed.
Now, it might become easier.
With demand for air rights increasing, a group of deal makers has figured out how to expand supply. They are proposing a “bank” to which eligible dwelling owners could sell their air rights. Developers could purchase this “invisible land” and use it beyond the local neighborhood where the seller was located. For now, described as a means for nonprofits to earn much needed money, the proposal applies only to landmark buildings. One air rights specialist said 291,623 square feet of air rights could be worth $75 million.
Or, as another air rights specialist said, “That’s what I do for a living, I sell air…”
Isn’t the concept of selling air rights basic to the history of a market system? Once you have monetized a commodity that previously had little value, just let demand and supply take care of everything else.
Sources and Resources: Primarily tucked away in real estate sections, articles on air rights are fascinating. For more of the types of facts I cite, this NY Times article and this one from WSJ.com were excellent. I also recommend the econlife posts on the sunny side of the street and the value of Larry Ellison’s view. As for NYC zoning laws and building height, do keep in mind that first you needed a dependable elevator, described here in econlife.
Title has been slightly edited.