The supply of air rights in West Chelsea, the area that covers the High Line and Chelsea Market, has been reduced to a trickle. Now, local officials are making sure that the remaining development rights would be sold at a premium.
The City Planning Commission is proposing a rule change that would set the price of air rights in the neighborhood to $500 per s/f, according to a notice of public hearing sent in advance to Real Estate Weekly. The document will be published in the City Record on October 24. That figure is almost double the average in Manhattan. According to a report from TenantWise, the average price of air rights in the borough was at $292 per s/f in 2016, up from $277 the previous year.
The proposal was triggered by a determination from City Planning Commission Chair Marisa Lago. On Sept. 29, Lago released a memo stating that 90 percent of the available air rights in the district have already been transferred. Under the city’s zoning rules, the CPC now has the power to determine a contribution amount that would be charged to developers looking to increase the floor area of their projects. The money will flow into the West Chelsea Affordable Housing Fund, which finances affordable housing projects in Manhattan’s Community Board 4.
Regulations restrict development in the High Line Transfer Corridor, a 100-feet wide area that covers the High Line between West 19th to West 30th Street. Landlords that own property in the HLTC are only allowed to transfer development rights to designated sites within the Special West Chelsea District, an area that covers Tenth to Eleventh Avenue between West 16th and West 30th Street.
The CPC determined the contribution amount by analyzing 19 “arms length” air rights deals that closed before the neighborhood hit the 90 percent threshold. The agency found that the median price for the transactions was $504.48 per s/f. The CPC said that it rounded up the amount for the sake of simplicity.
Deals over the $500 per s/f threshold have closed on the High Line. Last year, Six Sigma acquired 4,900 s/f of development rights at 509-511 West 27th Street. The developer paid $3.92 million or $800 per s/f.