Physical Vectors For Decentralized Growth
Air Rights & Low-Altitude Flight Is A Matter Of Law And Physics
Air rights are one of the most valuable and underutilized assets real estate owners have. Using their physical infrastructure to permit low-altitude flight and fluid development brings incredible outcomes.
I previously wrote about the benefits of air rights in real estate development. The link is here: Hedge Funds And The Beatification Of Air Rights. The story has another chapter as more air rights are traded.
Further Developments
Ken Griffin of Citadel is in partnership with Rudin Management and Vornado Realty Trust. Together they have a contract to purchase more air rights, up to 250,000 square feet. The air rights are those owned by St Bartholomew’s church.
St Bartholomew’s Church (St. Barts) was founded in the 1830’s in Manhattan's Bowery St. Initially, it was located on Great Jones Street and then on Madison Avenue and 44th Street. In 1918, structural issues drove a move to a new Park Avenue location, the current home of St. Bart's.
In 2016 it achieved National Historic Landmark status but maintaining old buildings costs money so the church looked to the heavens. The answer was divine, sell the air rights and transfer them to someone who can use them.
Underutilised assets are a waste for everyone involved and a net loss to society. Underutilized air rights can fuel a mismatch between potential value for a plot and realised gains.
Griffin, Rudin Management and Vornado Realty Trust have a contract to purchase the air rights from St. Bartholomew’s Church for $78 million or $312 per square foot. The current per-square-foot value of the land in the area is estimated at ~$2,000 per square foot. The contract is from 2024 but was only made public through court filing in the Manhattan Supreme Court.
The Collection Plate
The deal they have agreed is an option that expires in 2027. The contract costs $2 million and they need to pay $2 million this year and next, and another $4 million before the deal can close in 2026.
The reason the group of developers want the air rights is to transfer and use to increase the size of their building at 350 Park Avenue. They are planning a tower of 51 stories and over 1.5 million square feet.
What Is My Flying Car?
Flying cars and drones need access to low-altitude private airspace at scale. We have Electrical Vertical Take Off and Landing (eVTOL) vehicles being developed by several key players. Joby, Lilium, Volocopter, and Archer to name a few. According to McKinsey over $20 billion has been invested in this category, the real number is
likely far higher when governments’ and aviation incumbents’ R&D is taken into account. I want them to succeed so we get our flying cars on a commercial and locally accessible basis.
But what if the eVTOL developers are wrong? What if eVTOL is Betamax to VHS, if that were the case what’s the VHS flying car version in the cautionary tale? Is the sunk cost fallacy holding us back again?
Range Anxiety
Many eVTOL vehicles have a limited flight time of around 15 minutes with their payloads. The effective range, taking into account the vertical take-off and landing, is approximately 25 miles, allowing for 3-4 rides per day before recharging. However, the battery's short lifespan and the need for annual replacement make this cycle costly posing significant challenges for long-term viability.
As a loose comparison, driving a battery-powered car takes less power than flying. After 4-6 years the battery is done and a new one is needed, by all accounts, the cost of a replacement battery can be $3K - $20K. A large eVTOL flying multiple times a day and the pressure on the battery is very clear.
Noise
Some eVTOL companies report the noise during forward flight and no payload is 45 dB which is comparable to general conversation, this is assuming it’s travelling at a 400 ft altitude, which is in private airspace.
Noise is directly proportional to power usage. Additionally, the tonal nature of propeller noise, with low-frequency air chopping, travels far without atmospheric attenuation. This means that the propeller-driven vehicle will be noisy during takeoff and landing for people on the ground and passengers.
This limits the locations that eVTOL can take off and land from as people complain about the noise. This restricts them to helipad-type locations which are already ‘noise approved’. These locations are often not very convenient for the general public, so the total addressable market is lowered until this is solved. Distribution is a cruel mistress.
No Blades And No Battery
Jetoptera a company, whose founders’ stories of defecting from the Soviet block is a reminder that freedom and individual rights, including your air rights, are integral to a productive society.
Their vision is to create a world where aerial mobility is commonplace for both cargo and people.
They have developed a propulsion system, that has no blades and no battery. This means the vehicles that the technology is used in can operate like a helicopter but without the noise. They can operate like an eVTOL but without the electric battery. Sustainable fuel can be used or SAF as it’s called in the aviation industry. The market size if you don’t need to use only existing helipads and batteries is potentially bigger than the eVTOLs.
More locations to take off and land in and a low-altitude transportation network is interesting. The costs can be lowered by enabling more access and a flying car can be achievable for many of us.
They have partnered with EANAN in Dubai and are using their propulsion system to trial the J-500, which is reported to have a 500-mile range and top speeds of 200 knots. The prototype aims for its maiden flight in Q4 2024. It will be interesting to see how this progresses, and it will be excellent to see more than a single technology being developed for our flying car.
Decentralize Not Collectivize
How can we help drones and flying cars achieve their ambitions and protect individual property rights? The property owner owns low-altitude air rights, and drones and ‘flying cars’ need the airspace to fly in.
Property rights are essential to economic prosperity, those who don’t have those rights crave them, and it is vital to protect and guard them. By using air rights the skies can be opened up, the real estate owners can benefit and the drones and flying car companies can finally achieve their goals at scale.
Thank you for reading and supporting my work, please share in your networks. I can be contacted at jonathan@sky.trade with any questions or feedback.
