Tuesday, February 21, 2012

Some Data from Land Costs for Air Rights Development

In New York City air rights development is a big deal.* The city has conducted a study identifying nearly 500 opportunities for development using decking opportunities above transportation facilities. On the west side of Manhattan, many of the air rights are owned by Amtrak and have been leased by developers for building. There are still plenty of areas where construction can occur above railroads, however, including the areas around Hudson Yards.

I've been interested in air rights development for awhile, and use it as a focus of course projects. But finding actual data on acquisition and development costs is difficult because there are relatively few projects. The New York Post has a story about Brookfield Office Properties' project to build a large new development that includes about a three acre deck above Amtrak facilities. From that story there are some data about costs:
Industry sources estimated Brookfield’s land-basis cost for Manhattan West at a below-market $200 or less per buildable square foot, compared, for example, to the $300 a square foot incurred by SJP Properties at its new 11 Times Square. 
The $200 per square foot would include $300 million to build the deck — half what Brookfield first expected to pay. Last year, it learned it could use bridge-construction engineering to install the deck in prefabricated segments by cranes, rather than on supports rising from the yard itself.
Here is a link to a map of the site. Using these cost figures as a guide, air rights development is cost effective in Manhattan and will likely lead to new development in the west side as long as there is demand for new construction. It's a good thing there isn't a Jets stadium to get in the way.

On the flip side, if these numbers for deck construction transfer to other metro areas then I don't think decking will be cost effective in most cities.

*Many cities, including New York, are interested in air rights development over trenched freeways.

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