What are Air Rights and how they shape America's skylines
What exactly do you own when you own land? Is it the surface? Sure. But what about the trees and plants on it? And the natural resources that lie underground? Intuitively most people would say those too. But things start getting trickier when we move up into the sky.
The notion of owning the sky traces back to the ancient legal doctrine "cuius est solum, eius est usque ad coelum et ad inferos" which translates to “whoever owns the soil owns up to the heavens and down to hell”.
As imponent as it might sound, that statement comes with its own set of challenges, since the earth is spherical (at least to most of us it is), and that would mean that your property would shrink as you dig towards “hell” and would get bigger as you climb towards “the heavens”. But modern law has made sure we don’t have to worry about such nuances, especially regarding the “up to the heavens” part.
New York City stands as the epicenter of air rights transactions, a concept that has been instrumental in creating its iconic skyline.
As people tried to exploit the definition of land ownership, the law came in and cut our celestial wings to keep our cities healthy, organized and livable. But as soon as the law tried to regulate uncontrolled urban development practices, developers started looking for loopholes in those laws that would allow them to build more, to build higher, and to maximize profits.
New York City stands as the epicenter of air rights transactions, a concept that has been instrumental in creating its iconic skyline. The city's zoning laws, first codified in 1916 and overhauled in 1961, introduced the idea of Floor Area Ratio (FAR), limiting the total floor area a building can have relative to the size of its lot. But it left the door open for landowners to transfer their unused development rights to other lots.
In simple words, this means that if both my neighbor and I have the right to build 10 stories high, but I only build 5, I can transfer my rights to those extra 5 floors to my neighbor so that he can now build up to 15 stories high.
In simple words, this means that if both my neighbor and I have the right to build 10 stories high, but I only build 5, I can transfer my rights to those extra 5 floors to my neighbor so that he can now build up to 15 stories high.
Consider the case of One57, a super-tall residential skyscraper on West 57th Street, completed in 2014. To achieve its lofty height of 1,004 feet, the developers purchased air rights from several adjacent buildings, including the Art Students League of New York. This maneuver enabled them to offer residents unobstructed views of Central Park, which translated into astronomical prices for the luxury apartments within. In exchange, the Art Students League received funds for its programs, highlighting how air rights transactions can benefit multiple parties. Yet, the building's towering presence also sparked discussions about the impact of such developments on the city's character, affordability, and the shadows cast over cherished public spaces.
The sale of air rights can reach sums almost as high as actual real estate. In the particular case of One57 and some of its neighbors, which sits in one of Manhattan's most coveted areas, the purchase of air rights ranged from $200 to over $600 per square foot.
The ability to transfer air rights has sometimes been defended as a way to offer owners of historic or low-rise buildings a lucrative alternative to demolition or redevelopment, contributing to preservation efforts while fueling vertical growth elsewhere.
Does this mean if a developer acquired enough air rights, he could actually build up to the heavens?
No, there are checks in place. Zoning laws typically impose a cap on the total FAR a building can achieve, even after accounting for purchased air rights. This "hard cap" ensures that developments remain within the scale envisioned by urban planners. In New York City, for example, while developers can augment their projects by buying air rights, they cannot exceed the maximum FAR designated for their zoning district. These regulations aim to balance the desires of developers with the needs of the community, maintaining a semblance of order amid the city's relentless push skyward.
There are limitations on how much air space a plot can buy, and the distance between the buying and the selling plots.
Proximity is also an important factor. Different municipalities, and even different areas of a city limit how far from their owned lot one can go to buy air rights. In many cases, transfers are limited to neighboring properties or those within the same block. New York City allows for some flexibility through zoning lot mergers, where properties can be combined for zoning purposes if they share any boundary, even at a single point. Special districts, like the Theater District, permit transfers over a broader area to support specific policy goals, such as preserving cultural landmarks.
This regulatory landscape is not uniform across the United States. Cities like Chicago and Boston have their own approaches, shaped by local priorities and physical constraints. In Chicago, air rights have enabled ambitious projects over existing infrastructure, such as the 150 North Riverside tower, which stands on a narrow site above active rail lines. The building's developers purchased air rights and employed innovative engineering solutions to create a slender yet stable structure.
Similarly, Boston's Fenway Center project utilizes air rights to construct over the Massachusetts Turnpike, aiming to reconnect neighborhoods divided by the highway.
Or in San Francisco, where developers of the Sales Force Tower had to buy the rights to more height from the Transbay Transit Center.
While the mechanisms differ, the underlying principle remains: air rights offer a means to maximize urban space in a vertical direction.
Air rights are not unique to the United States, but the market-driven mentality of the US has made it one of the countries where they are traded the most.
The ability to purchase air rights is not exclusive to the United States, but it certainly is one of the countries where it’s most commonly used. In countries like the United Kingdom, air rights are generally non-transferable, and development is more tightly controlled through planning permissions. In Japan, developers may receive bonuses for providing public amenities but cannot typically purchase additional air rights from other properties. These international variations reflect different societal values and approaches to urban growth, with the United States embracing a more market-driven, flexible model.
Economics are at the heart of air rights transactions. For developers, acquiring air rights can be a strategic investment, allowing for taller buildings that yield higher returns. For property owners, particularly those with historic buildings or low-density structures, selling air rights can be a windfall, and provides a financial incentive to preserve existing buildings rather than demolish them. Municipalities also benefit, as these transactions can be leveraged to achieve urban planning objectives. Cities may require developers to contribute to affordable housing, infrastructure improvements, or public amenities in exchange for the ability to build higher, aligning private interests with the public good.
Arguments in favor include the preservation of low-rises, while arguments against include excessive especulation, gentrification and widening socio-economic disparities.
Like most capitalist pitches it would seem that the transfer of air rights has only upside, however that’s not always the case. The proliferation of air rights deals raises concerns about equity and the impact on communities. The construction of super-tall, ultra-luxury residences often caters to the wealthiest individuals, contributing to gentrification and widening socio-economic disparities. Neighborhoods may face increased congestion, strained infrastructure, and changes to their character. Environmental considerations also come into play, as towering buildings can cast long shadows, affecting sunlight and the enjoyment of public spaces.
Regulatory complexity is another argument against air rights transfers. Navigating air rights transactions requires legal expertise and financial resources, potentially favoring large developers over smaller entities.
Despite these challenges, air rights remain a potent tool in the urban development arsenal, particularly in cities where space is at a premium. They embody the tension between growth and preservation, innovation and tradition, individual rights and collective interests. As America's cities continue to evolve, the way we navigate the skies above will profoundly shape the urban experience.
Understanding air rights is essential not only for those in the real estate and legal professions but for anyone interested in the forces that sculpt our urban environments. The buildings that reach into the clouds are more than feats of engineering; they are symbols of our aspirations, our values, and the complex interplay between the tangible and intangible aspects of city life.
In the end, the story of air rights is a story about space—how we define it, control it, and ultimately, how we choose to fill it. It's about looking up and seeing not just steel and glass, but a reflection of societal priorities and the legal frameworks that underpin them. As we gaze upon the skylines of New York, Chicago, and beyond, we're witnessing the manifestation of policies and practices that extend far beyond the horizon, reaching into the very air above us.