Creating Value Out Of Thin Air: Air Rights Decoded

On Dec. 8, 2022, New York City Mayor Eric Adams outlined his "Get Stuff Built" initiative to "add hundreds of thousands of units to address the [the housing crisis]," including loosening administrative hurdles required in connection with rezonings, special permits, and other discretionary actions. This is great news for zoning and land use practitioners—the faster the better! However, in the interim as these proposals take shape, this article focuses on the hidden, as-of-right, no discretionary interference method to maximize development potential: The transfer of air rights (technically, the transfer of "floor area") from one tax lot to another.

When I first began my career, my understanding of an air rights deal was a way for a big-time developer and a mom-and-pop, one-story business to somehow both make a windfall. One party sitting on unused value and one party capable of realizing such value seemed like a win-win (and still does). So, to understand more, I