Utilization of Highway Air SpaceDefinitions:

• “Air space” A specific, legally described area, which lies under or over another structure, such as a highway facility, railroad tracks, etc.

• “Air rights” The right to use and control open space above the property owned by another party.

• Field research data point to athree-pronged investigation:

Utilization of Highway Air Space

Incentives:

• Intense urbanization of cities• Scarcity of developable sites of a substantial area downtown• Urban highway corridors as extensive empty spaces dividing the city• Opportunity for shaping city form• Untapped source for unlocking revenue for metropolitan development

Definitions:

• “Air space” A specific, legally described area, which lies under or over another structure, such as a highway facility, railroad tracks, etc.

• “Air rights” The right to use and control open space above the property owned by another party.

Historical Context

• First significant project – Ponte Vecchio exterior and interior views; Florence, 14th century.

• First case in U.S. – before and after views of New York Central Railroad and newly decked Park Avenue, New York City, 1900s.

Linear Cities

• Le Corbusier – plan for Algiers, 1930-34.• Edgar Chambless – “Roadtown,” 1910.• Tokyo’s “Linear City,” 1964

An Evolving Case Study

Urban Development Goals:

• Renewed interest if air rights utilization as a catalyst for urban development.

• New Memorandum of Understanding between the Massachusetts Turnpike Authority (MTA) & the Boston Redevelopment Authority (BRA) resulting in a corridor master plan known as “Civic Visions”

Central Artery

Massachusetts Turnpike

The Pioneers: Hancock & Copley Place

Vital Statistics:

• Area (S.F. + %USE)

Hancock (garage-retail)Parking: 734,000 (97%)Retail: 26,000 (3%)Office: N/A (0%)Copley PlaceParking: 340,000 (25%)Retail: 360,000 (27%)Office: 640,000 (48%)

• Indicators (%) - respectively

ROTA: 11.21 / 9.62 %ROE: 11.79 / 7.37 %IRR: 22.04 / 21.73 %

Hancock (garage-retail), 1976 Copley Place, 1984

Return Measures

• Return Measures – trends

The following table shows a breakdown of Value per FAR sq. ft. and the air rights allocation Project Name Stadttor (a) Malietoren Grotiusplaats Equinox Hancock Transaction-Completion 1994-1997 1994-1996 1995-1997 1999-2002 1968-1976

FAR 10 16 8 6 8

Gross FAR sq. ft. 420,000 285,000 220,000 110,000 760,000 Value for comp. Terra Firma site/FAR sq. ft $39.00 $33.00 $33.00 $33.00 $40-60 Value for Air Rights/FAR sq. ft. $21.87 $41.36 $37.33 $31.78 $22.75 Air Rights premium/FAR sq. ft. $21.87 $21.97 $23.06 $21.85 $15.24 Air Rights Residual ($/S.F.) $0.00 $19.39 $14.27 $9.93 $7.51 Project Name Copley ICAO (b) CDP (c) KeyTower Remarks Transaction-Completion 1976-1984 1993-1996 1999-2002 1978-1990 FAR 12 8 8 16 Gross FAR sq. ft. 1,340,000 400,000 725,000 888,500 Value for comp. Terra Firma site/FAR sq. ft. $40-60 $30.00 $30.00 $36.00

Value for Air Rights/FAR sq. ft. $44.59 $35.08 $25.19 $42.70

CA$1 land in ICAO&CDP

Air Rights premium/FAR sq. ft. $22.54 $10.89 $4.20 $26.88 Air Rights Residual/FAR sq. ft. $22.05 $24.19 $20.99 $15.81 (a) Value is of land fee ownership; highway agency has a right-of-way easement (b) An assumed 40% of the Gross FAR sq. ft. went to the land; land donated by Canada to UN (c) An assumed 20% of the Gross FAR sq. ft. went to the land; land is used by a public agency

Air Rights Development Premium

A = V - P , in which,A = the residual value of the air rightsV = the value of a comparable fee parcelP = the air rights construction premium

A = V - (D + T + P + O) , in which,D = Deck (Structural)T = Tunneling ExpensesP = Parking (Above Ground)O = Other, i.e. soft costs/carrying costs/etc.

A = V - (D + T + P + O)+ LA + BD + SV +ZT , in which,

LA = Land Assembly savingsBD = Minimal or no Building Demolition costsSV = Site Visibility marketing gainsZT = Zoning Treatment (Taxation) benefits

Air Rights Development Premium

Foundation/platform 307.33

Fees+general conditions 40.19

Contingency 17.38

Tunnel protection/equipment 28.37

Fees+general conditions 3.66

Contingency 1.54

Other (e.g. PAG) * 148.94

Fees+general conditions 19.39

Contingency 8.51

Soft costs 97.75

Carrying cost 4.26

Capitalized operating expenses 15.37

Total air rights deck / s.f. 692.67

Total terra firma (UGP) / s.f. ** -284.63

Net air rights premium / s.f. 408.04

* Parking Above Ground due to tunnel infringement

** Under Ground Parking incorporated in the foundation(a) estimates assuming above ground parking

Air rights deck premium - Boston

DATA Source: Cassin Winn Development, 2002

Air rights costs vary according to the scope of air rights construction – usually structure up to the deck – compared to conventional work – structure upwards from the deck. Diagram – Copley Place structural

grid in preparation of air rights deck

AASHTO & Metro Surveys

Lessons Learned

Joint development of transportation corridor air space is viable in dense urban locations where the demand for space and related land values have reached levels where, in spite of the increased construction costs.

Revenue expectations can be met and can still render the value of the air rights competitive to adjacent sites on terra firma.

An expanded view of cost-benefit analysis must be adopted, one that takes into account not only the immediate monetary returns, but also, the health and vitality of a community that has been knit together again.

Community Concerns

6.93

6.31

6.13

5.00

4.57

3.53

3.38

2.06

8.00

8.21

8.29

9.074.54%

4.97%

5.02%

5.15%

5.95%

6.53%

6.72%

8.24%

9.02%

11.67%

12.19%

20.00%

0.00 5.00 10.00 15.00 20.00 25.00

- Affirmative Action in Area Jobs

- Neighborhood Gentrification

- Housing % Off-Site

- Housing % On-Site

- Improved Utilities & Services

- On-Site Wind Effects

- On-Site Noise Pollution

- On-Site Air Quality

- Corridor Site Improvements

- Safe Pedestrian Circulation

- Increased Vehicular Traffic

- Project Design & Massing

Issu

es

Percent Response

Percent

Mean

Construction Challenges

Highway air space projects often exhibit increased risk due to site restrictions:

• Allow for continued/safe corridor use• Phase the work for least disruption• Strain to adjacent businesses/residents• Form w/ long spans/transfer beams• Unfamiliar/special building assembly• Limited space for staging/storage

Limitations imposed on the construction have a negative impact on labor cost:

• Cost for labor raised significantly as amount of work that is scheduled in nights and weekends increases.

• Construction time prolonged as amount of work that can be scheduled in a 24-hour period is reduced

• Extended time and budget increase project financing costs and the associated project market timing risk

Urban Regeneration Potential

Socioeconomic indicators (before and after air rights development show positive effects in terms of household value, rent and income. * Tracts No. 105, 106 and 107 for Back Bay; No. 703, 706, 707 and 708 for South End

Household Value

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1970 ('00$) 1980 ('00$) 1990 ('00$)

Time

Va

lue

($) City of Boston

Back Bay

South End

Household Rent

0

200

400

600

800

1,000

1,200

1970 ('00$) 1980 ('00$) 1990 ('00$)

Time

Va

lue

($) City of Boston

Back Bay

South End

Household Income

0

10,000

20,000

30,000

40,000

50,000

60,000

1970 ('00$) 1980 ('00$) 1990 ('00$)

Time

Va

lue

($) City of Boston

Back Bay

South End

Joint development of highway air space is viable in dense urban locations where the demand for space and related land values have reached levels where, in spite of the increased construction costs.

Revenue expectations can be met and can still render the value of the air rights competitive to adjacent sites on terra firma.

An expanded view of cost-benefit analysis must be adopted, one that takes into account not only the immediate monetary returns, but also, the health and vitality of a community that has been knit together again.