Tishman Speyer has purchased an additional $157 million worth of air rights for its $3.2 billion, 65-story Spiral office tower at New York City's Hudson Yards, giving the company the air rights it needs to begin development, according to The Real Deal.
This latest purchase from the Hudson Yards Infrastructure Corporation and the Metropolitan Transportation Authority (MTA) gave the developer 669,000 square feet of space. Tishman Speyer has spent $265 million in all for more than 1 million square feet of air rights.
The Bjarke Ingels–designed tower will feature signature landscaped terraces winding up its exterior. Pharmaceutical giant Pfizer will be its anchor tenant, leasing 800,000 square feet.
On the ground or in the air, New York City real estate is incredibly valuable, and private companies and public agencies alike regularly use it as a bargaining chip.
SL Green, developer of the $3 billion One Vanderbilt mixed-use office tower in midtown Manhattan, almost saw the project sidelined after a legal dispute over air rights. The project is located near New York City's Grand Central Station, and the station's owner, Midtown TDR Ventures, claimed the city undercut its air rights position with SL Green after rezoning the area. SL Green had been in negotiations with Midtown for air rights, which Midtown valued at $880 per square foot, until the rezoning made a deal unnecessary. SL Green ended up settling with Midtown.
The MTA used the value of leases on its 26-acre Hudson Yards property to back a massive, $1.06 billion bond sale in September 2016. The agency plans to use payments it receives from land leases for the 26-acre development to repay the debt. The MTA has valued the leased Hudson Yards property between $3.2 billion and $3.7 billion. The Real Deal reported that the MTA's lease will bring the agency $1.78 billion during the construction for ground-lease payments and air rights, and then $89 million per year after the project is built out.
Air rights are also in play in Boston, where the Massachusetts Department of Transportation in July signed a $21 million, 99-year lease for a $600 million mixed-use project that will be built partially over a section of the Massachusetts Turnpike.