Land has been bought, sold, and governed for centuries. Airspace is newer territory, literally. As drones, air taxis, and commercial aviation activity push into lower altitudes above cities and properties, the question of who controls what happens above the ground is no longer academic. Air rights are now operational policy.
This article explains what air rights are, how they are legally defined, how they have been used in real estate and urban development, and what their emergence as a governance concern means for municipalities today.
What Are Air Rights?
Air rights are the legal entitlements that govern what can be built or operated in the space above a property. In most jurisdictions, a landowner's property rights extend upward from the surface, but not indefinitely, up to a height at which federal or national airspace regulation takes over.
The classic legal formulation comes from Roman law: cuius est solum, eius est usque ad coelum et ad inferos, which translates to: whoever owns the soil owns up to the heavens and down to the depths. Courts in the United States and elsewhere modified this principle as aviation emerged in the early 20th century. The US Supreme Court established in United States v. Causby (1946) that landowners do not own all airspace to an unlimited height, but they do hold rights to the lower airspace directly above their property sufficient to enable "full enjoyment" of it.
In practice, this means the column of air above a parcel of land has legal value: it can be sold, transferred, leased, restricted, or regulated, separately from the physical land beneath it.
Air Rights in Real Estate Development
The most established use of air rights is in urban real estate development, where they have been traded for decades. The core mechanic is simple: if a landowner builds below the maximum allowable height for their zoning envelope, they hold unused development potential, known as air rights, in that gap. Those rights can be sold to neighboring developers who need additional vertical capacity.
New York City has one of the most active air rights markets in the world. Several of the city's most prominent skyscrapers were made possible by purchasing air rights from neighboring properties, allowing them to rise higher than standard zoning would permit on their own footprints. Chicago, Boston, and several other major cities have similar transfer of development rights (TDR) frameworks.
In these real estate transactions, air rights represent a genuine financial asset. A property with significant unused development potential above it holds transferable value. Buyers pay for the right to build higher on their own parcels by purchasing that unused capacity from neighbors who are not using it. Transactions in New York have reached $400 per square foot of transferable development rights for premium locations.
The New Dimension: Low-Altitude Airspace for Drones
The air rights conversation has shifted significantly with the rise of commercial drone operations. The relevant question is no longer just about what can be built above a property. It is about what can fly above it, and who has the authority to permit or restrict that activity.
In the United States, the FAA regulates the National Airspace System. Federal authority over airspace is broad and pre-empts local restrictions on where aircraft, including drones, can fly. Cities cannot set altitude limits or designate no-fly zones without FAA coordination.
However, cities retain meaningful authority over the ground-based aspects of drone operations: where drones take off and land on public property, what permits commercial operators need to use public infrastructure, how noise and nuisance are managed, and what fees are charged for ground-level access. This is the operational layer where municipal air rights governance sits.
As commercial drone delivery, infrastructure inspection, and emergency response operations scale, accelerated by the FAA's proposed Part 108 rule for BVLOS operations. The volume of activity in low-altitude urban airspace is increasing rapidly. Cities that build governance frameworks now, including structured access systems and fee models, will be positioned to participate in that economy rather than simply observe it.
How Air Rights Can Generate Revenue for Cities
The economic model for municipal air rights governance follows infrastructure precedents. Cities charge telecom companies for antenna placement on public structures. They charge utilities for right-of-way access along public corridors. The same logic applies to commercial drone operators who need ground-level infrastructure, such as landing pads, nest sites, and charging stations, to run regular operations over urban areas.
Unlike one-time development rights transfers in real estate, municipal drone airspace access generates recurring revenue. An operator running daily delivery routes over a city's residential neighborhoods needs ongoing access to ground infrastructure, and that access can be priced accordingly. As the volume of operations grows under frameworks like Part 108, the economic value of structured access agreements grows with it.
Cities that establish clear, transparent fee structures early, based on actual governance costs and airspace usage, are more likely to attract operators who want regulatory certainty, and more likely to generate public support by demonstrating that airspace activity benefits community budgets, not just corporate logistics operations.
Key Concepts in Air Rights Governance
Transfer of Development Rights (TDR): The mechanism by which unused building potential above one property is sold to enable greater density on another. Common in urban real estate markets with strict zoning.
Low-Altitude Airspace: Generally defined as airspace below 400 feet AGL (Above Ground Level) in the US, where most commercial drone operations occur and where local-federal jurisdictional questions are most active.
Airspace Easement: A property right that allows someone to use the airspace above another's land for a specific purpose (e.g., a flight corridor), similar to a surface easement for access roads.
Municipal Airspace Governance: The operational and policy frameworks cities build to manage, coordinate, and generate revenue from drone and advanced air mobility activity in low-altitude airspace within their jurisdiction.
Related reading: Air Rights for Cities — How Municipalities Monetize & Govern Low-Altitude Airspace — practical frameworks for turning airspace into municipal revenue.