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planning, air rights, urbanism,




Can we imagine a future in which property owners make tangible their claims to the volumes of space above their buildings as symbols of ownership, control, and wealth?

Transferable Development Rights (TDR) or “air rights” are real estate development tools that turn the municipal land use controls that restrict the height and bulk of buildings into an opportunity to buy and sell finite units of undeveloped air. Therefore, TDR provides local governments with an effective and flexible tool to ensure that the municipality can achieve the right mix of building density and open space without causing a financial burden to individual landowners or constricting desired development. When used well, TDR programs can bring cost-effectiveness and efficiency to real estate development projects, particularly near historic properties (like Grand Central Terminal or the High Line) whose preservation means ceding (or selling) their right to build to the maximum floor-to-area ratio (FAR) permitted for their site.

Can we imagine a future in which the responsible use of this effective tool for development has given way - air as an investment, divorced from proximity or association to any specific site? In such a scenario, the air we breathe would become both a commodity – like gold or oil – and the basis for an abstract financial instrument disconnected from any physical properties — like the collateralised debt obligations (CDOs) or derivatives that have wreaked havoc on our economy in recent years.

As a development tool and an object of trade, TDR is currently used in a variety of ways. Property owners purchase certain air rights to increase their FAR (floor-to-area ratio) on a given plot within the city, transferring rights from a plot elsewhere that does not fully utilise its own FAR to benefit their plot. In areas where density is regulated, the system is used to compensate owners for the potential loss of revenue due to the regulation of height. Another use is as a method to halt development, or to exert an influence over the specifics of a project. Air rights could be bought and hoarded as a tactic to increase their value. There are many other ways that this system could manifests itself, but the fundamental idea is the trade of air based on a speculative concept of its worth.

As in any market, investors have an interest in increasing the value of this new commodified air, which can lead to speculation and the inflated value of these tradable claims to paper wealth. As the use and commodification of this tool intensifies, questions remain about how the trade will affect the built environment (and the real estate finance) of New York City.

Government officials and speculators alike are actually looking into the creation of an Air Bank, where air rights can be accumulated and divided just like shares. Air rights would also be able to be transferred from one district to another, so the playing field, and the potential profits, would be much larger. Brokers and traders would be brought in to facilitate these movements for new investors, who are betting on the potential of these air stocks to perform for them. Plans for a TDR trading system that performs like a bank – basing credit extension and perceptions of wealth upon the speculative value of these stocks – further distances ideas of value from the actualities of the physical commodity, the air above a building.

The first real air rights building, constructed notionally over Grand Central Terminal in New York, was the Pan Am Building by Walter Gropius, Emery Roth & Sons, and Pietro Belluschi (built from 1958-62). It saw the cash-strapped owners of the railway terminal sell the right to develop the unused air above their building to the owners of the new building, thus symbolically filling the void in zoning space above the station, even if slightly dislocated. 

A contemporary example of changing datums is the celebrated High Line development. The transformation of the disused, industrial railway into elevated public parkland brought about the changing of the architecture that surrounds it. Neil Denari’s HL23 mini-condo tower, for example, purchased unused air rights from above the High Line in order to swell above its permitted size. The demand for height near this newly desirable area – one which otherwise has a relatively low zoning limit – has seen a large-scale selling of air rights to those who wish to rise above others. The perceived value of an air right is the future ability for someone to utilise it elsewhere, but the detachment from its physical reality or location highlights a potential future problem for the proposed air rights bank system. 

As this air becomes more of an investment tool than a realised development, it becomes another commodity that can be manipulated and exploited in the financial markets. As a financial instrument, it would be subject to the same excitable fluctuations as any share price on any trading floor. Currently, the air rights trade in New York is limited to transactions that are site-specific and relatively small, with values closely associated with both the donor and receiver sites. Therefore, as a development tool, the system appears to be manageable and efficient. 

As an investment tool, however, air would become subject to the same thinking that got us into our current financial mess: totally detached from reality and fully entering the maniacal world of speculation. If air itself – as opposed to a site-specific right to develop property in a specific, regulated way – becomes a commodity, new institutions that deal in its trade will have to be developed. To explore this idea, I developed an architectural proposal for an imagined future in which the trade of air is commonplace, an architecture that deals with the commodification of an indefinable and ubiquitous product. 

We saw a similar scenario play out with John Law’s Mississippi Scheme and his new Bank Generale (later renamed the Bank Royale) in the early 1700s. The fortunes of the French nation were tied up in the new paper currency Law produced, which was underwritten by promises of the continual exploitation of land and natural resources in America. The values of stock became so overinflated that people forgot where the actual value was coming from. When the value of this magical growth was questioned in 1720, the system collapsed catastrophically, bringing the nation to its knees. 

The Mississippi Scheme bubble was not the first, and certainly not the last, example of misguided faith in and frenzy surrounding speculative ventures. The famous case of Holland’s “Tulipomania” likewise lasted for a short but intense period in 1636-37, and saw people lose their houses and life savings for having invested in the humble tulip bulb. Further examples of failed speculative ventures in recent history are more abundant than tulips; names like Ponzi or Madoff, or even Lehman Brothers, call into question our faith in financial instruments. History repeats itself, and when the commodity is forgotten – left to disappear into the ether, like air – all you are left with is speculation on speculation.With everything else in the world commodified, what else is there left? The air that we breathe, the air we trade, is the new commodity in rapid urbanising cities. History teaches us that the consequences of mania creation are erratic and often devastating. All that is staked on air is staked on abilities to perpetuate this mania. Marx saw the fetishising of commodities as exerting a far-reaching power over mankind, and his stories of course ended with revolutions. We must be careful not to upset the balance… but creating gold from air? Now that sounds like a plan…Our last breath may be our deepest.

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