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Office Developments Reach for the Sky (Air Rights)

March 26, 2018

 

 

According to a recent report by Tenantwise, developers bought more air rights for office projects in 2017 than for residential condominium projects for the first time since 2013,  Tenantwise calculated that the average pricing for office air rights in 2017 increased to $315 per square foot, the highest in the history of its survey.  This figure does not include the recapitalization of the Grand Central Terminal air rights sold in 2016 but filed late in 2017 — and only for a portion of the deal. In recent prior years, office air rights had been selling at lower price points ranging from the low- to mid-$200s per square foot. 

 

With JPMorgan Chase's recent $300s per square foot air rights purchase for redeveloping its New York City headquarters at 270 Park Avenue, the prior years' average air rights sales prices reporrted by Tenanwise could be considered a bargain in the years to come. Buying air rights to incorporate into a proposed development helps to bring overall construction costs down tremendously and bolsters profit for investors.

 

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