Queens developers increasingly taking advantage of air rights

From the Times Ledger:

Over the past two years, Heatherwood Communities has bought up the lion’s share of development rights in Queens for its nearly 500,000-square-foot residential tower at Queens Plaza in Long Island City.

The company paid $12.6 million in 2011 for the 17,500 square-foot property at 42-12 28th St., which is zoned for up to 175,000 square feet of development, where it plans to erect a 477-unit, 58-story tower.

In order to build bigger, Heatherwood purchased 86,630 square feet of air rights for the project in 2012 and bought up another 102,430 square feet of rights in 2013, paying $100 per-square-foot in both transactions.

Heatherwood was not the only developer buying the LIC sky in 2013.

Another outfit, Brooklyn condo builder Kora Developers, paid approximately $120 for each of the 2,300 square feet of rights it purchased in December for its even-story, 21-unit mixed-use project in the Hunter’s Point section of the neighborhood.

The developer shelled out $2.83 million a year ago for the 5,000-square-foot lot on the corner of 11th Street and 47th Road, which zoning limits to 20,000 square feet of development.

Kora principal Alex Kostovetsky said the building will cap out around 26,000 square feet with about 4,000 square feet of commercial space in the cellar, which he said does not count toward the building’s limit.

In markets like midtown Manhattan where the rights are frequently traded, the price developers are willing to pay for the assets is easier to gauge, but in places where purchases are few-and-far between the market is still difficult to predict.

Historically, most air-rights transfers in Queens occur when a single owner — or related entities — combines the development capabilities of two or more lots he or she owns.

For instance, in 2012 the Macedonia A.M.E. Church in Flushing transferred about 35,680 square feet of unused rights to the lot next door where the church is constructing a 14-story, 140-unit affordable housing project.

Transfers like this provide no information about the price for air rights because no money is exchanged, but they do indicate developers’ inclinations to look toward the assets to help their projects grow.