By: James Lee, Esq., Senior Commercial Counsel, Madison Title Agency
Real estate developers in New York City seeking to construct a brand new building or to expand on their existing building confront zoning constraints on the size of the buildings that may be built on a particular piece of land. Faced with this zoning limitation, these real estate developers sometimes turn to the adjoining landowners for excess development rights to maximize what they can build on their site. The transfer of excess development rights have allowed NYC developers to build towering residences with enhanced views.
The sale and purchase of these developments rights have become a very big business, particularly in Manhattan. Thanks to a recent feeding frenzy, prices have skyrocketed for these development rights. In the theater district in Manhattan, development rights have sold for $409 per square foot and every indication points to the price of development rights increasing even higher. Continue reading