By R. Kymn Harp
In Part I of this series, the legal foundation for “air rights” development was introduced. The following hypotheticals illustrate practical examples of air rights development.
As discussed in Part I, air rights development is a combination of black letter real estate law and the applicable zoning code of the community in which your property is located. Because zoning codes are legislative pronouncements, they are subject to change as local municipal governments determine appropriate. For this reason, the current zoning classification and its attributes for every project, and certainly for any project involving air rights development, must be examined as part of the due diligence investigation.
Hypothetical Facts:
Suppose you are planning to acquire a 20,000 square foot parcel in Chicago, Illinois zoned DC-12 or DX-12. Your purchase price is $7,500,000. You believe it is a perfect location for a restaurant and entertainment complex serving food and liquor, with live entertainment and dancing. You visualize a state of the art venue spread out over 2 floors, with about 18,000 square feet of usable space per floor, for a total restaurant and entertainment venue of 36,000 square feet. For simplicity of illustration, assume you can build to the lot lines.
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