Airspace Rights Value Calculator

Air rights are valuable development assets in dense urban markets.

Buildable SF

Market value PSF

Construction PSF

Soft cost %

Profit margin %

Entitlement risk discount %

Air rights value

$45,225,000

Value per SF

$603

Gross revenue potential

$135,000,000

How the math works

Residual = revenue − construction − soft − profit margin. Air rights = residual × (1 − risk discount).

75k × $1,800 = $135M − $37.5M − $20.25M − $27M = $50.25M × 90% = $45.2M air rights value ($603/SF).

How to Use

Enter buildable SF air rights.
Enter market value PSF.
Enter construction cost PSF.
Enter entitlement risk discount %.
Read air rights value.

Frequently Asked Questions

What are air rights?

The right to develop the vertical space above a property. Under most zoning, owner has right to build up to specified height/FAR. Unused air rights = unexercised zoning capacity. Valuable in dense urban markets (NYC, SF, DC, Boston, Chicago). Worth nothing in markets with excess developable capacity. Typically held as vertical fee estate, allowing transfer separately from underlying land.

How valuable?

NYC midtown: $500-1,500/buildable SF. Manhattan residential: $200-600/buildable SF. Other major metros: $100-500/buildable SF. Value depends on: zoning capacity, proximity to amenities, market rent, construction cost. Typical transaction: 100,000 SF air rights at $500/SF = $50M. Not uncommon for condo developers to buy air rights from church, synagogue, historic building owner.

How to value?

Residual method: (finished unit value × buildable SF) − construction cost − profit margin − soft costs = air rights value. Example: $2,000/SF condo × 50,000 SF = $100M revenue. $600/SF construction × 50,000 = $30M. Soft cost $15M. Profit margin $20M = $35M residual air rights value = $700/SF. Adjust for entitlement risk and timing.

Transaction structure?

Zoning lot merger: two adjacent properties treated as one for zoning purposes. Sending site cedes FAR to receiving site. Legal document: zoning lot development agreement. Requires: adjacent properties (within 200-300 ft typically), consent of all parcels, zoning compliance confirmation. Alternative: TDR via designated TDR program. Each has different legal structure. Hire experienced zoning attorney for structuring.