New York City Air Rights

The real estate market in New York City is vastly complex. The city’s limited amount of land has resulted in the need for real estate developers to find new ways to expand. With these confined borders that surround Manhattan, many developers are looking to the sky in order to continue building.

Additional floor area and building height made available through the process of zoning lot mergers and air rights transfers has allowed real estate developers to create new offerings in a crowded market. But just how does this process work? What types of laws limit the size and height of buildings in the city? Following is some information to help developers navigate this complex area of real estate law.

What are air rights?

The term “air rights,” also referred to as “excess development rights” is floor area that is allowed by zoning but has not been constructed or used. For example, in a zoning district that allows a Floor Area Ratio of 5.0, a 10,000 square foot property may be developed with up to 50,000 square feet of floor area. If the property contains a building that has only 40,000 square feet of floor area, the property has 10,000 square feet of air rights.

How are air rights used?

Air rights can be used on the property itself by enlarging the existing building – in the example above, for instance, by adding 10,000 square feet – or they can be used on an adjoining property where the owners of the properties agree to “merge” their properties into a single “zoning lot.” The owner of the property with air rights may then sell and transfer the air rights to the adjacent property owner, who can use them to build a larger building on the adjacent property. This is sometimes called a “transfer of development rights” or “TDR.”

Although most TDRs are done via zoning lot merger, in some locations under specified circumstances, air rights may be transferred to non-adjacent properties. For example, in the Midtown District, air rights from Broadway theaters may be transferred to any site that is within the Theater Subdistrict. Also in the Midtown District, air rights from landmark buildings may be transferred to non-adjacent sites that are within the new East Midtown Subdistrict. Citywide, air rights from landmark buildings may be transferred to sites that are across a street or an intersection.

Are there limitations on the height of a building in New York City?

Yes, limitations are present and they vary depending on a number of factors, including the size and shape of the property, it’s location and the zoning district in which it’s located. In certain zoning districts in certain locations, buildings having a lot coverage less than a specified percentage of the zoning lot are considered “towers,” which are not limited as to height. Zoning lot mergers facilitate towers by enlarging the zoning lot, thereby decreasing the percentage of the building’s lot coverage.

It is important to note that these laws are changing.

The recently approved East Midtown Subdistrict, in addition to allowing landmark air rights to be transferred to sites throughout the Subdistrict, also significantly increased allowable FARs.

These changes are of particular interest not only to the owners of landmarks in the area, who now have a broader market for their air rights, but also to owners of properties containing older buildings that exceeded the previous allowable FARs. The increased FARs and other new regulations will allow these properties to be redeveloped with new buildings without losing the overbuilt floor area.

If you or your company is looking to sell or purchase air rights, please contact  Frank C. Chaney at [email protected] or (212) 551-1279 and he can assist you.