To real estate outsiders, the concept of air rights often comes as an almost whimsical surprise. “You can own the sky above a building? I didn’t even know that was a thing!” But for the initiated, it is well understood that the air above a building can greatly affect square footage price. We see it happen hyperbolically in markets like Manhattan. Closer to home – and the focus of this post – are developers in Florida debating: Who owns the air rights in Sarasota?
The Quay
Let’s set the scene: EXT. DAY. Downtown Sarasota, FL. Waterfront property. 14 acres. Demolished in 2007. Being seriously redeveloped for residential and commercial use by GREENPOINTE HOLDINGS and SUB-DEVELOPERS since 2018.
Act 1. The conflict is introduced.
Clashing opinions have arisen among the developers operating within the bounds of Greenpointe Holdings’s property, The Quay. The land has been divided into parcels so that different builders can construct their vision, be that luxury condos, a restaurant row, or office towers.
The Air Above Quay Commons
It’s clear where the property lines fall on the actual surface area of the land. But a dispute has emerged over a small road within The Quay called Quay Commons – more specifically, regarding the air above that road. One Park Sarasota wants to build an enclosed tunnel above the road between and connecting two of its buildings. Greenpointe Holdings is ready to sell.
But the board of another condo developer, Ritz-Carlton Residences (owned by Marriott International), asserts that Quay Commons belongs to all the buyers in The Quay – it’s a road owned in common. By their logic, Greenpointe Holdings cannot simply sell the road to One Park. All of the buyers in The Quay must agree.
Naturally, One Park doesn’t appreciate the potential pause of its construction plans. They have already sold over half of the six penthouses in their proposed project, with penthouses priced around $13 million. But if the dispute isn’t resolved in a timely manner, the city won’t approve their building permit. They would surely feel the dent of losing those condo deposits if construction moves too slowly.
The Ritz-Carlton Residences already exist in The Quay as an 18-story condominium tower. All the units in that tower are sold and inhabited; future ownership changes passed on to the vicissitudes of the Sarasota market. Their condo board seems concerned with the views down Quay Commons for their residents – namely, they don’t want a big glass tunnel in the way.
Adding to that, they cite One Park’s early renderings as the foundation of their expectations which show two separate buildings and conspicuously lack any mid-air tunnel connecting them over the road.
Dispute Territory
Act 2. Conflict comes to a head.
One Park’s NY and Sarasota development partners filed a lawsuit against the Block 5 Condominium Association for the Ritz-Carlton Residences. It also names several companies associated with other buyers of The Quay. One Park is hoping for a quick judgment so their project application with the city can continue.
Not surprisingly, the opposing sides come to very different conclusions on how this may play out. One managing partner at PMG predicted the case wouldn’t last 90 days, citing their legal counsel’s belief that the case won’t need discovery.
On the other side, one attorney for the condo board predicts resolution won’t happen for at least six months(which would definitely interfere with One Park’s construction timeline).
Act 3. Resolution (pending due to writer’s strike).
It remains to be seen if heels are dug in – or if construction plans are re-worked to confine the buildings to their undisputed private air space sitting directly on top of their property. But it should be evident by the number of developers, boards, partners, associations, and investors involved that these air rights can be a significant source of value that people can and will fight over.
It’s All About What’s Out Your Window
Air rights often come down to these two features of value: utility and aesthetics. Builders want the opportunity to build up and make spaces more dense so they can sell and rent more apartments, condos, or offices. So, air rights in a place where tall buildings are allowed? That’s some valuable sky.
But they also want to increase the price of their space by providing future buyers or renters with coveted “views” of the surrounding area. That inverse relationship is part of the tension with air rights, because the highest value is when you use your air rights while no one around you uses theirs. It can become an unspoken detente where property owners don’t build further vertically in fear of creating a race to the sky where everyone loses. That fear is not unreasonable as a simple internet search for “spite houses” or “spite buildings” shows the dangers of mixing money and pettiness.
As frivolous as this may sound, you have probably evaluated a potential living space based on what you could see from a window. Is it a sparkling, blue bay? An elevated train track? The bricks of your neighbor’s wall? For many people, that view from the kitchen, bedroom, or living room affects how they feel day-to-day.
And this comprises a touchstone of real estate in general. Part of the value of a place is ineffable. It’s how a place makes a person feel. Real estate law attempts to codify that ineffability with concepts like air rights which speak to both utility and aesthetics. While much of the law developed through disputes is driven by economics, there is a significant history of disputes solely regarding the views obtainable from a property and the feelings they generated in the owners. As immortalized in the 2002 science fiction epic Firefly’s theme song, “Take my love, take my land, take me where I cannot stand. I don’t care, I’m still free, you can’t take the sky from me.” So, perhaps there is a tinge of whimsy to it after all.