The average price paid in Manhattan for the transfer of air rights—the undeveloped space above a building—rose 47% in 2013 from the previous year, according to a report from Tenantwise Inc., a New York real-estate services and advisory company.
As land prices rise, developers are moving to secure air rights to enable them to build towers with highly coveted, highly profitable upper-floor apartments. Building tall also renders construction costs more economical, experts said.
Air rights have matured into an indispensable financial component to a number of large developments. In some cases, developers have paid the same price a square foot for air rights—which are also known as transferable development rights—as they did to buy the land, said M. Myers Mermel, chief executive of Tenantwise.
Transferable development rights "are the top revenue producers in any building because they become the new upper floors," said Mr. Mermel. "You can get higher prices because top floors are the most expensive in any building."
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Pictured above Christ Church on Park Avenue and 60th Street. The church sold air rights in a 2013 deal. Keith Bedford for The Wall Street Journal