Fewer but larger air-rights transactions in Manhattan pushed the average price of an air-rights deal up 5 percent last year from 2015.
Prices rose to an average of $292 per square foot, compared with $277 per square foot in 2015, a new TenantWise report has found.
The highest price per square foot, $1,258, was paid by Extell for just 16.000 square feet of transferable development rights by the Theater District.
Four jumbo deals in Hudson Yards totaling 843,293 square feet skewed the average deal size up to 51,918 square feet. By comparison, in 2015 there were just two Hudson Yards transactions for a total of 97,713 feet.
A total of 31 transactions took place in 2016 for 1,609,451 TDRs, vs. 51 in 2015 that totaled 1,566,068 TDRs. The total cost was $469,168,092, vs. $434,580,684 in 2015. About half the 2016 TDRs were for Hudson Yards-area projects.
One of the sticking points going forward will be the calculations used to price air rights in the upcoming Midtown East Rezoning, with real estate owners and executives hoping for a free market for transfers within the district and not a set price floor that would benefit the government first. The report states, “[It] will significantly impact the value of owners of air rights in Midtown East.”
“With the Midtown East proposal as well as a new look at the Theater District, the city is now looking to participate in air-rights transfers,” said M. Myers Mermel, chief executive of TenantWise. “This could have a negative effect on nonprofits, churches and synagogues.”
