The Air Up There

That closet-size studio you looked at last week isn’t the only outrageously priced real estate in New York.

The Zeckendorf brothers, the developers of the pyramid-topped towers on Union Square East, have agreed to pay $450 a square foot for air rights along Manhattan’s prestigious Park Avenue. The deal will allow the transfer of air rights from the Christ Church and the Grolier Club at Park Avenue and East 60th Street to the construction of new 35-story residential tower. Through this process, known as Transfer of Development Rights or “TDR”, real estate developers can purchase unbuilt square-footage from smaller neighboring buildings and essentially apply these as credits to erect a larger building than could be constructed according to the underlying zoning regulations. Savvy developers have been employing this method for years. Donald Trump used this approach when he purchased air rights from underdeveloped neighboring buildings to construct his lofty 90-story World Trump Tower at First Avenue and 47th Street. Back then he paid a paltry $10 million for air rights from the Holy Family Catholic church on East 47th Street. It’s no surprise that NYC real estate is costly, but the $450 price tag is the highest price for a square foot of undeveloped air rights on record.

While the Transfer of Development Rights is perfectly legal, opponents of the mechanism contend that it undermines the spirit of zoning regulations and the principles of city planning.