Posted by Leonard Steinberg on January 2nd, 2014
Has the air above a building become as valuable or even more valuable than the land it is built on? It appears so…. Transferable air rights have soared in price to $500 a square foot, making them worth more than the dirt below. Donald Trump made buying air rights famous when he developed the Trump World tower at 845 United Nations Plaza, thus incensing neighbors who discovered that what they thought could be a limited heigth building, actually could be much, much taller if neighboring building air rights were purchased.
Every lot in New York has what is known as F. A. R…..a floor area ratio. Floor area ratio = (total covered area on all floors of all buildings on a certain plot, Gross Floor Area) / (area of the plot). Floor area ratios are used as a measure of the intensity of the site being developed. The ratio is generated by dividing the building area by the parcel area, being sure to use the same units. The floor area ratio can be used in zoning to limit the amount of construction in a certain area. For example, if the relevant zoning ordinance permits construction on a parcel, and if construction must adhere to a 0.10 FAR, then the total area of all floors in all buildings constructed on the parcel must be no more than one-tenth the area of the parcel itself.
In 1915, when the 42-story Equitable Building was erected in Lower Manhattan, the need for controls on the height and form of all buildings became clear. Rising without setbacks to its full height of 538 feet, the Equitable Building cast a seven-acre shadow over neighboring buildings, affecting their value and setting the stage for the nation’s first comprehensive zoning resolution. Zoning determines the size and use of buildings, where they are located and, in large measure, the density of the city’s diverse neighborhoods. The transfer of unused development rights from one zoning lot to another is allowable in limited circumstances, usually to promote the preservation of historic buildings, open space or unique cultural resources.
This year we should see several examples of this phenomena including the Continuum mega-tower on East 22nd Street between Broadway and Park Avenue South: while the trend was first seen on the block at One Madison Park where the developers had assured all buyers they had purchased all the surrounding air rights, this turned out to be false and many, many square feet of air rights remained on the surrounding blocks that have now been purchased to create this large, rather skinny, cantilevered tower.
I think building tall is wonderful and a hallmark of Manhattan: I do however question the concept of one very tall building surrounded by mostly much shorter buildings…..surely zoning should be creating districts where super-tall buildings can be built? The temptation of existing, fully built buildings to sell off remaining air rights is huge in an environment where the costs of operating and maintaining a building keep rising. While Mayor de Blasio bemoans the cost of new buildings and these large mega-towers that buy out neighboring air rights, he should also turn his attention to the prohibitive building maintenance costs in New York City that often force buildings to sell the air above them.