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Development Rights (“Air Rights”) in New York City

In a densely populated city like New York City, where practically every inch of land is developed, you might be looking to the sky and wondering how you can acquire more space to develop, or what value the unused space above your property may hold. The airspace above a piece of real estate in New York City is a valuable asset and can be a strategic way of acquiring more space for development. Each piece of real estate in NYC has zoning regulations that determine how high developers can build. So what happens when you run out of vertical space, or you have excess vertical space you don’t intend to use? That’s where air rights come in. Air rights determine how high you can build, and can be transferred from one property to another, or merged with a neighboring property.

What Are Air Rights?

Air rights, also known as “development rights,” refer to the ability to develop or transfer the unused air space above a property. Property owners can sell, merge, or transfer their unused air rights to adjacent properties, or other properties in some circumstances, allowing for developers to build taller buildings than their own zoning allows.

For example, suppose a zoning district allows for a floor-to-area ratio (FAR) of 4.0. That means a 10,000-square-foot property may be developed with up to 40,000 square feet of floor area. If the property contains a building that currently has only 30,000 square feet of floor area, the property has 10,000 square feet of air rights which can be developed, transferred, merged, or sold to another property.

How Are Air Rights Determined?

The determination of air rights is based on zoning regulations set by the NYC Department of City Planning. The transfer or merging of air rights must be approved by the planning board. The key factors that determine air rights include the zoning district where the real estate is located and the floor-to-area ratio (FAR) regulations for that district. FAR regulations dictate the maximum number of square footage that can be developed on a site relative to the lot area. The FAR of a building can vary depending on several factors including the property’s existing building size, the zoning district, whether the building faces a wide or narrow street, the use of the building (commercial, residential, community, or manufacturing), and the current or potential public benefit of the building.

The Landmarks Preservation Commission (LPC) also plays an important role when dealing with historically significant buildings, and allows for the exchange of air rights in areas that have a cultural or historical designation. In a landmark exchange, developers can own air rights and make developments in the LPC-designated areas under the regulation of the NYC coding zone, and may exchange property between areas not adjacent to each other.

How to Buy Air Rights in New York City

Purchasing air rights in NYC involves a complex process that requires careful consideration of zoning codes and regulations. Typically, air rights can be bought from neighboring properties or can be acquired through zoning lot mergers. A zoning lot merger is when you combine two or more zoning lots in order to combine the zoning calculations of two or more properties as if they were one. The merger allows the property owner(s) to disperse the unused development rights in whatever way they wish between the two properties. Zoning lot mergers do not require the tax lots to be combined. Transactions must comply with city regulations, and thorough attention to detail is essential to ensure all legal requirements are met.

Can Air Rights Be Transferred?

Yes, air rights can be transferred between properties. This process is commonly referred to as transferred development rights (TDR). Property owners with unused air rights can transfer them to adjacent properties or within a single zoning lot without a zoning lot merger and TDRs may be used to transfer floor area between properties that are not touching under certain circumstances. The transfer of air rights is subject to approval by the Department of City Planning and must adhere to the specific zoning district’s regulations. The process of applying for a TDR is more complicated than a zoning lot merger and is less common.

How Our Real Estate Attorneys Can Help You

Navigating the complexities of air rights transactions requires a deep understanding of NYC zoning laws. Our experienced real estate attorneys can assist with evaluating potential air rights, negotiating terms, and ensuring compliance with all legal requirements. We provide comprehensive services tailored to your individual circumstances to both buyers and sellers of air rights, ensuring a smooth and successful transaction.

Speak With an Experienced NYC Real Estate Attorney

If you’re considering buying or selling air rights in New York City, it’s crucial to consult with an experienced real estate attorney. Our team is well-versed in NYC zoning regulations and can guide you through the process, from initial evaluation to finalizing the deal. Contact the experienced attorneys at Holm and O’Hara LLP today to schedule a consultation and explore your options for selling or acquiring NYC air rights.

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