Air Rights Guide: How Air Rights Work in Real Estate

Air rights refer to the legal ability to occupy the vertical air space above a plot of real estate. This encompasses any empty space above a property, from the upper stories of a high-rise building, to power lines, to a region of airspace above a property. Air rights often come into play with commercial and residential real estate located in urban areas—like Manhattan and Brooklyn in New York City—where space on the ground is limited and developers maximize buildable space by building vertical structures like skyscrapers. Developers can buy air space with or without buying the building on ground level to increase a space’s property value.

When someone buys residential or commercial real estate, they’re also buying the air rights above the land’s square footage that they can use as they desire. In most cases, the airspace of a building can be used in any way the property owner sees fit, as long as the height of their structure complies with zoning laws and building codes of the particular zoning district.

The boundaries of any new development or existing building cannot encroach upon an adjacent property that you do not own the rights to. Transferable Development Rights (TDRs), can be used to sell the space above any unused development property to another property owner. Air rights don’t extend into navigable airspace which is regulated by the Federal Aviation Administration (FAA); often this is a minimum of 1,000 feet above the highest obstacle in congested areas.

There are two ways of securing the air rights to a property, which include:

• Purchasing the property: If a developer wants to build a 72-story building where a 2-story building currently stands, they can buy that building, knock it down, and build a new structure that maximizes the air space how they want to.
• Transferable Development Rights: If a developer wants to purchase the air space above an already-existing building—either to build out horizontally from an adjacent building, or to preserve a view—they can secure Transferable Development Rights to the space by buying the air space above that building from the existing owner.

Air rights don’t just pertain to privately-owned real estate. Here are some examples of larger, often public, air rights and how they are controlled.

• Air travel: In the twentieth century, easements were put in place to facilitate the use of airspace for travel, superseding existing property rights. Today, navigable airspace is governed by the Federal Aviation Administration (FAA), and typically begins at 1,000 feet above the highest obstacle on the ground.
• Roads: The airspace over highways can be valuable, especially in cities. For example, in 2017, the Massachusetts Department of Transportation sold the air rights over a section of the Massachusetts Turnpike in Boston to private real estate developers, where they will be building a residential and commercial compound.
• Railroads: Railroad companies can purchase air rights to build platforms over their railways, providing a foundation for developments like high-rises, train stations, and stadiums.

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