Air Rights Deliver Multi-Million Dollar Returns
Technology That Enables The Use Of Airspace Compounds Returns
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SkyTrade has received several inquiries and offers of investment, so we are exploring an initial round, if interested please contact me directly at jonathan@sky.trade, we are always happy to chat to aligned humans.
A version of the elusive flying car was on display. Joby and Volocopter were doing some test flights and PR moves in New York.
We need to think about how we can permit these flying cars, and their smaller cousins, drones, to be in private airspace. Allowing our private airspace to be used means we can have a better connected, cleaner and more decentralized transportation system while increasing incomes.
It’s all about the air rights.
Are Air Rights Valuable?
Michael Dell's MSD seized an opportunity in 2016, acquiring a stake in the air rights over Grand Central Terminal during a hard-fought legal battle. The terminal's owner, Andrew Penson, was involved in a $1 billion lawsuit with New York City and SL Green Realty, and wanted to unlock the fortune tied to the 1.2 million square feet of air rights acquired with the landmarked terminal in 2006. In 2012 the proposed rezoning of Midtown East seemingly paved the way for the lucrative air rights transactions.
The City Council's rejection of rezoning a year later altered the landscape, granting SL Green approval to develop One Vanderbilt, an office skyscraper adjacent to Grand Central without acquiring Penson's air rights.
Penson retaliated with a $1.1 billion lawsuit against the city and SL Green, alleging deprivation of property rights. In 2016, amidst the legal strife, MSD made a canny move, purchasing a stake in the air rights partnership for $63 million from a Lehman Brothers affiliate.
Relying on the the zoning thoughts, dreams and politically motivated requirments of individuals to extract value from your air rights need no be so contentious. When the utility of the airspace becomes valuable without a single brick being laid the route to passive income and increased asset values become attainable.
The turning point arrived in 2017 when the city greenlit the Midtown East rezoning. MSD and TF Cornerstone capitalised on the opportunity, selling air rights to JPMorgan to redevelop its 270 Park Avenue headquarters. The reported return from the air rights deal was ~$230 million, a 3.6X return (if it was without leverage!) in 2 years.
MSD also negotiated air rights transactions with TF Cornerstone and RXR Realty for the Grand Hyatt redevelopment at 175 Park Avenue. Those who know, know what value their air rights have.
Property - Land And Air
Property owners large and small in common law jurisdictions are now looking for ways to gain further returns from their air rights by signing up at SkyTrade. One application is to allow UAVs to transit through their airspace for compensation. Up until now, this airspace was barren, an arid desert waiting to be explored and utilised once the technology emerged to unlock it.
If You Can Sell Airspace You Can Rent It
In the United States and Australia for example, like all common law jurisdictions, airspace purchases have been undertaken in many cases by way of stratum subdivisions or easements acquired by developers over the neighbours’ land below. This and the process commonly referred to as Air Development Rights (ADR) outlined in the MSD case is a sub-group of air rights that have certain permissions attached.
Offering airspace to rent to those who need it, if you are the rightful owner is not dissimilar to using AirBnb to utilise a spare room in your home. However, with airspace, you have none of the issues involved in having a person in your home.
Change Is The Only Constant In Life
Trespass to airspace over land could occur… where the incursion…. may interfere with the occupier’s ordinary uses of the [property] land. - LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490, 495
Without permission transit into private airspace is trespassing. The ordinary use of land is what is so interesting in the ruling in the LJP case, the ordinary use of land has changed over time. What was ordinary use has changed since drones became part of our transportation ecosystem.
At points in history, barren rock formations were left to the elements until precious metals or oil and gas were found. What was once farmland became energy-producing fields driving our ambitions forward and fuelling the growth of many of the most powerful nations, and the pipelines add value and income to surrounding landowners.
Coal was dug from the grounds, the ordinary use of the land up until this point was used for grazing sheep and cattle. But the utility derived from the coal to power the trains and industry was so great our world was forever altered through this step change. Digging and moving this coal across private land increases the incomes of decentalized landowners.
Wars have been fought over land that was once arid desert and now bears wealth so vast, that counting the cash is an industry in and of itself. Cities and countries have sprung to life as the ‘ordinary use of land’ changed. Ordinary use changes over time for land and air, and those who own the rights control it.
Low-altitude airspace is the untapped resource that will help drive economies forward, reduce the reliance on a chaotic transport and zoning system, and enable individual landowners of all sizes to gain from its use, decentralized democracy at its finest.
Drones & Flying Cars
With the advent of Unmanned Aerial Vehicles (UAVs) / drones and air taxis, commonly referred to as eVTOLs - electrical Vertical Takeoff And Landing vehicles, the use of land and air rights has changed and is continuing to change.
When people try and predict the future and make bets on it, very often they get it wrong. The majority of self-styled contrarians are ironically mostly the same. It is not for want of trying but for want of vision - seeing beyond what is in front of us can be hard and pattern recognition short circuits thought for simplicity.
Whats Fundamental
We know that it’s a fundamental truth that machines that fly need airspace to fly in. We know that it’s a fundamental truth in the United States and common law jurisdictions that the underlying property owner, owns their air rights.
No one shall be arbitrarily deprived of property - UDHR
These companies need the airspace that is controlled by a decentralized base of property owners. UAVs transitting through airspace with permission increases the adoption of UAVs and helps to prove these operators’ business models.
Permission to be in the airspace eliminates legal actions for trespass, and for those who control the air space, the property owners, it increases the value of the underlying property assets and generates passive income, a win-win.
Thank you for reading and you can contact me at jonathan@sky.trade
