The Untapped Potential of Airspace

In an era where every square inch of urban land seems to be accounted for, a new frontier is emerging right above our heads. SkyTrade, a pioneering platform led by CEO John Docquerel, is setting out to monetize the airspace above properties, turning what was once considered empty space into a valuable asset class. This innovative approach not only has the potential to reshape real estate markets but also to accelerate the development of drone delivery networks and even pave the way for flying cars.

What are Air Rights?

Air rights refer to the legal ownership of the space above a property. In many jurisdictions, particularly those following common law traditions like the United States, United Kingdom, Canada, and Australia, property owners have rights to the airspace above their land up to a certain height. This concept, which dates back to ancient legal principles, has become increasingly relevant in our modern, three-dimensional urban landscapes.

John Docquerel explains the historical context:

"Originally, it was from heaven to hell. The government over reached out and took some of that back. But in the US, for example, it's up to 500 feet above the highest point. UK is similar."

The SkyTrade Vision

SkyTrade's platform aims to create a marketplace for these air rights, allowing property owners to monetize their airspace and enabling developers, drone operators, and other interested parties to acquire or lease these rights. This approach has the potential to unlock significant value in urban areas where vertical development is at a premium.

The Drone Delivery Catalyst

One of the primary drivers behind SkyTrade's focus on air rights is the emerging drone delivery industry. As companies like Amazon, Walmart, and various startups look to revolutionize last-mile delivery with unmanned aerial vehicles, they face a significant hurdle: the legal right to fly through private airspace.

Docquerel identified this challenge early on:

"I was seeing that drones could fly. The technology was there for drones to fly. In fact, they'd been there for quite some time. And the kind of question popped into my head, like, where are the drones? Literally, where are they? What's going on?"

His investigation revealed that while regulatory hurdles were often cited as the primary obstacle, the legal complexities surrounding low-altitude airspace ownership were a major, often overlooked, factor.

Creating a Marketplace for Air Rights

SkyTrade's solution is to create a decentralized marketplace where air rights can be tokenized, bought, sold, and leased. This approach aims to solve several key issues:

1. Providing legal certainty for drone operators
2. Offering property owners a way to monetize their airspace
3. Creating a more liquid market for air rights in real estate development

Docquerel explains the potential impact:

"Every airspace or every piece of low-altitude airspace is owned by someone or some entity. So it seemed to me, as you mentioned, my background in marketplace, it seemed to me like this was built for a marketplace."

The Real Estate Angle

While drone delivery may have been the initial catalyst, SkyTrade quickly recognized the broader implications for the real estate industry. In many urban areas, particularly in cities like New York, air rights have long been a valuable commodity in development deals.

Docquerel cites a high-profile example:

"St. Patrick's in Manhattan. They'd air rides above it. They were never gonna develop. Their church looks too good, but they need the money. So congregations are dwindling. They need the money, repair the roof. So they sold the air rides. So they sold the air rides for about 164 million, and the person who purchased them, in this particular jurisdiction, New York was able to transfer them to another block."

This example illustrates the immense value locked up in air rights, even for properties that aren't actively developing their airspace. SkyTrade aims to make these transactions more accessible and transparent through blockchain technology.

Tokenization and the Solana Blockchain

SkyTrade has chosen to build its platform on the Solana blockchain, leveraging its high-speed, low-cost transactions to create a more efficient marketplace for air rights. The company uses compressed NFTs based on the Metaplex Bubblegum standard to tokenize individual air rights.

Docquerel elaborates on their choice of blockchain:

"We started using immutable X, like a ZK roll-up equivalent, but it quickly kind of transpired the amounts of tokenization we needed to do off the NFTs with so much that we needed to use something that was a little bit more efficient, quicker and so, yeah. So that's why we started looking down the Solana route. And in fact, Solana have been incredibly helpful with us."

This decision to build on Solana aligns with the blockchain's reputation for scalability and developer support, positioning SkyTrade to handle the potentially massive volume of transactions in a global air rights marketplace.

The Market Potential

The potential size of the air rights market is staggering. SkyTrade estimates that the value of tokenized air rights could reach $30 trillion globally. While this figure may seem optimistic, it's based on careful analysis of existing air rights transactions and the potential for unlocking value in urban areas worldwide.

Docquerel breaks down the valuation:

"New York is possibly the most valuable on the basis that air rights are trading for up to about $400 a square foot, which is huge. So that's really high. It equates to about 15 to 18% of the value of the land below it or the building, whichever way you want to look at it."

While not all jurisdictions will command such high prices, even more modest valuations in other urban areas could add up to a significant global market.

Challenges and Opportunities

Creating a new asset class and marketplace comes with its share of challenges. SkyTrade must navigate complex legal frameworks that vary by jurisdiction, educate property owners about the value of their air rights, and build trust in their platform among real estate professionals and drone operators alike.

However, the opportunities are equally significant. By creating a more liquid market for air rights, SkyTrade could:

1. Accelerate urban development by making it easier to assemble air rights for large projects
2. Provide a new revenue stream for property owners, particularly in areas where physical development is restricted
3. Facilitate the growth of drone delivery networks by streamlining the process of acquiring flight paths
4. Potentially influence urban planning and zoning decisions as the value of air rights becomes more transparent

The Drone Delivery Landscape

While the full potential of drone delivery has yet to be realized, progress is being made. Docquerel notes:

"At the moment, it's like 30, I think it might be slightly, but in around 30 Wal-Mart's who do and drone delivery in the US, there's a couple of other places doing it like restaurants and stuff in kind of smaller towns that are testing them out."

This gradual rollout is helping to build public acceptance and work out logistical challenges. SkyTrade's platform could play a crucial role in scaling these operations by providing a streamlined way to secure the necessary airspace rights.

The Future of Urban Air Mobility

Beyond drone delivery, SkyTrade's vision extends to the broader concept of urban air mobility, including the potential for flying cars or electric vertical takeoff and landing (eVTOL) vehicles. While Docquerel is enthusiastic about the potential, he's also realistic about the challenges:

"A lot of the ones out there are battery powered and I think they're not really long-term going to work. Batteries in general, despite what people may say is old technology, it doesn't work very well. They're very heavy."

He suggests that alternative power sources like hydrogen or new propulsion technologies may be necessary to make flying cars a reality. Additionally, Docquerel believes that the focus should shift from airport-to-city-center routes to inter-town transportation to maximize the utility of these future vehicles.

Public Acceptance and Community Engagement

One of the key challenges in realizing the potential of airspace monetization and drone delivery is public acceptance. SkyTrade's approach includes giving property owners control over their airspace and the ability to benefit financially from its use. Docquerel explains:

"Our view the best way they're gonna be happy with it is if you give them a little bit of something back, right? Or at least you give them control over their airspace so that they can say, yes, I want a no fly zone, or yes, happy to have the drones in Monday to Friday. No problem as long as I get some sort of fee for it."

This strategy could help alleviate concerns about privacy and noise while creating a sense of ownership and participation in the emerging aerial economy.

Regulatory Landscape and Industry Collaboration

The regulatory environment for drones and air rights is evolving rapidly. Docquerel notes positive developments in the United States:

"There was a change of the administrator in the FAA last year, I think was last year. And he previously was CEO of Supernal, which is a Hyundai's flying car company. So he's pretty future facing. So he is awarding licenses for what they call beyond visual line of sight drones."

This shift towards more progressive regulation, combined with state-level initiatives to enable drone operations, suggests a growing recognition of the economic potential of low-altitude airspace.

SkyTrade's Growth and Future Plans

SkyTrade has made significant progress since its inception. The company recently completed a pre-seed funding round led by Modular Capital and Portal Ventures, demonstrating investor confidence in their vision. With nearly 8,000 air rights already tokenized on their platform and a waitlist of over 9,000 potential traders, SkyTrade is poised for rapid growth.

Docquerel outlines their immediate plans:

"The kind of the main thing we're looking at among us is the launch of what we call the option as. So if anyone's interested in becoming kind of an early user of that, an early trader, just sign up to the wait list."

This "auction house" feature will allow property owners to set auctions for their air rights and enable interested parties to make bids, creating a dynamic marketplace for this new asset class.

The Intersection of Real Estate and Blockchain

SkyTrade's approach represents a fascinating intersection of traditional real estate principles and cutting-edge blockchain technology. By tokenizing air rights, the company is not only creating a new market but also demonstrating a practical use case for blockchain in the real estate industry.

This could have far-reaching implications beyond air rights. The success of SkyTrade's model could pave the way for broader adoption of blockchain technology in real estate transactions, potentially streamlining processes, reducing costs, and increasing transparency across the industry.

Implications for Urban Planning and Development

The creation of a liquid market for air rights could have significant implications for urban planning and development. City planners and developers may need to consider the value of airspace more explicitly in their decision-making processes. This could lead to more creative and efficient use of urban space, potentially enabling:

1. Taller, more slender buildings that preserve street-level open spaces
2. The preservation of historic low-rise buildings while allowing for development above them
3. More equitable distribution of development rights across urban areas
4. New funding mechanisms for public infrastructure projects through the sale of air rights over public land

The Role of Smart Contracts in Air Rights Transactions

SkyTrade's use of blockchain technology enables the implementation of smart contracts for air rights transactions. These self-executing contracts with the terms of the agreement directly written into code could streamline the process of buying, selling, and leasing air rights.

Smart contracts could automatically handle:

1. Transfer of ownership or lease rights
2. Payment processing
3. Enforcement of usage restrictions or time-limited access
4. Revenue sharing for ongoing drone operations

This automation has the potential to significantly reduce transaction costs and increase the efficiency of the air rights market.

Data Collection and Urban Analytics

As SkyTrade's platform grows, it will accumulate a wealth of data on air rights transactions and usage patterns. This data could prove invaluable for urban planners, policymakers, and researchers studying urban development trends. Anonymized and aggregated data could provide insights into:

1. The economic value of airspace in different urban areas
2. Patterns of drone activity and potential congestion points
3. The impact of air rights transactions on property values and development patterns

This data-driven approach could lead to more informed decision-making in urban planning and policy development.

Environmental Considerations

The monetization of airspace and the facilitation of drone delivery networks raise important environmental considerations. On one hand, drone deliveries could potentially reduce ground-based traffic and associated emissions. On the other hand, the proliferation of aerial vehicles could have impacts on wildlife, particularly birds, and contribute to noise pollution.

SkyTrade's platform could play a role in mitigating these concerns by:

1. Enabling the creation of no-fly zones over sensitive ecological areas
2. Facilitating the implementation of time-based restrictions to reduce noise during certain hours
3. Providing data to help optimize flight paths and minimize environmental impact

The Global Potential of Air Rights Markets

While SkyTrade is initially focusing on jurisdictions where air rights are clearly defined, such as the United States and United Kingdom, the potential for global expansion is significant. Docquerel notes:

"When you come to Europe, less so, right? So if we wanted to do Europe, we have to do a deal directly with the government of that particular country. That's not to say we can't, but for us, that seems like a pretty long sales cycle."

As the concept of monetizing airspace gains traction, there may be increased pressure on governments worldwide to clarify and codify air rights, potentially opening up new markets for platforms like SkyTrade.

The Role of Education and Outreach

One of the key challenges SkyTrade faces is educating property owners, real estate professionals, and the general public about the value and potential of air rights. Docquerel's "Where's My Flying Car?" substack newsletter, which has gained over 16,000 subscribers, plays a crucial role in this educational effort.

By continuing to engage with industry stakeholders and the public, SkyTrade can help build understanding and acceptance of this new asset class, paving the way for broader adoption of their platform.

Potential Partnerships and Ecosystem Development

As SkyTrade grows, there are numerous opportunities for partnerships and ecosystem development. Potential collaborations could include:

1. Drone delivery companies looking to secure flight paths
2. Real estate developers seeking to acquire air rights for projects
3. Urban planning consultancies integrating air rights data into their models
4. Environmental organizations working to protect sensitive airspace
5. Insurance companies developing products for air rights and drone operations

By fostering a diverse ecosystem of partners and stakeholders, SkyTrade can strengthen its position as a central platform in the emerging aerial economy.

The Impact on Property Valuations

The creation of a liquid market for air rights could have significant implications for property valuations. Traditional real estate appraisal methods may need to be updated to explicitly account for the value of air rights. This could lead to:

1. Increased overall property values in areas with high demand for air rights
2. New investment strategies focused on acquiring properties with valuable air rights
3. Changes in lending practices to account for the potential value of air rights

As the market matures, we may see the emergence of specialized air rights appraisers and new financial products tied to air rights valuations.

Privacy and Security Considerations

As drone activity increases and air rights become more actively traded, privacy and security concerns will need to be addressed. SkyTrade's platform could play a role in managing these issues by:

1. Enabling property owners to set privacy zones or no-fly areas above their land
2. Implementing secure identity verification for air rights transactions
3. Providing tools for tracking and auditing drone activity in specific areas
4. Collaborating with regulators to develop best practices for protecting privacy in the age of aerial vehicles

The Future of Urban Transportation

While much of the focus is currently on drone deliveries, the long-term vision for urban air mobility includes passenger transportation. Docquerel shares his thoughts on the challenges and potential of flying cars:

"I think they need to be inter-town. Like, you know, they need to be town to town rather than like downtown to airport. I think the concentration of these things around airports is the wrong way to look."

This perspective suggests that the true potential of urban air mobility may lie in creating new connections between urban centers rather than simply replacing existing transportation modes. SkyTrade's platform could play a crucial role in facilitating the air rights needed for these inter-urban air routes.

Conclusion: A New Frontier in Urban Development

SkyTrade's vision for monetizing airspace represents a bold new frontier in urban development and property rights. By creating a liquid market for air rights through blockchain technology, the company is not only unlocking billions of dollars in potential value but also paving the way for transformative technologies like drone delivery networks and urban air mobility.

As cities around the world grapple with the challenges of density, sustainability, and technological integration, platforms like SkyTrade offer innovative solutions that could reshape our understanding of urban space and property ownership. While there are certainly challenges to overcome, the potential benefits in terms of economic value, urban efficiency, and technological progress are immense.

The success of SkyTrade and similar initiatives could usher in a new era of three-dimensional urban planning, where the sky is not the limit, but a new realm of possibility for sustainable and dynamic city growth.

Facts + Figures

• SkyTrade is a platform that allows property owners to monetize their airspace, particularly for drone operations and real estate development.
• Air rights in the US extend up to 500 feet above the highest point of a property.
• SkyTrade estimates the potential value of the global air rights market at $30 trillion.
• In New York City, air rights can trade for up to $400 per square foot, equivalent to 15-18% of the underlying property value.
• St. Patrick's Cathedral in Manhattan sold its air rights for $164 million.
• SkyTrade has tokenized nearly 8,000 air rights from real estate owners on its platform.
• The company has a waitlist of over 9,000 potential traders for its upcoming auction house feature.
• SkyTrade uses compressed NFTs on the Solana blockchain to tokenize air rights.
• Approximately 30 Walmart stores in the US currently offer drone delivery services.
• The FAA has begun issuing licenses for beyond visual line of sight drone operations, potentially accelerating the growth of drone delivery networks.
• SkyTrade's "Where's My Flying Car?" newsletter has over 16,000 subscribers, primarily investors and real estate professionals.
• The company recently completed a pre-seed funding round led by Modular Capital and Portal Ventures.
• In London, the air rights above zones 1 and 2 are estimated to be worth about £52 billion.
• Battery technology is currently seen as a limiting factor for the development of flying cars due to weight and power constraints.
• SkyTrade's Radar app allows users to intercept drone signals and gather metadata, including GPS coordinates and pilot information.

Questions Answered

What are air rights?

Air rights refer to the legal ownership of the space above a property. In many jurisdictions, particularly those following common law traditions like the United States, United Kingdom, Canada, and Australia, property owners have rights to the airspace above their land up to a certain height, typically around 500 feet. This concept has become increasingly valuable in urban areas where vertical development is at a premium and for emerging technologies like drone delivery.

How does SkyTrade's platform work?

SkyTrade's platform creates a marketplace for air rights by tokenizing them on the Solana blockchain. Property owners can register their air rights on the platform, which are then verified and tokenized as compressed NFTs. These tokenized air rights can be bought, sold, or leased through SkyTrade's marketplace. The platform also includes features like an upcoming auction house for air rights and a Radar app that tracks drone activity to ensure compliance with air rights ownership.

What is the potential value of the global air rights market?

SkyTrade estimates that the potential value of the global air rights market could reach $30 trillion. This figure is based on analysis of existing air rights transactions in high-value markets like New York City, where air rights can trade for up to $400 per square foot, equivalent to 15-18% of the underlying property value. While not all markets will command such high prices, the aggregate value across urban areas worldwide could be substantial.

How could monetizing air rights impact urban development?

Monetizing air rights could have significant impacts on urban development. It could lead to more creative use of vertical space, allowing for taller, slender buildings that preserve street-level open areas. It could also enable the preservation of historic low-rise buildings while allowing for development above them. Additionally, it could provide new funding mechanisms for public infrastructure projects through the sale of air rights over public land. The creation of a liquid market for air rights could also influence urban planning decisions and zoning regulations.

What role does blockchain technology play in SkyTrade's platform?

Blockchain technology, specifically the Solana blockchain, plays a crucial role in SkyTrade's platform. It enables the tokenization of air rights as compressed NFTs, providing a secure and transparent way to record ownership and facilitate transactions. The use of blockchain also allows for the implementation of smart contracts, which can automate various aspects of air rights transactions, such as transfers of ownership, payment processing, and enforcement of usage restrictions. The high speed and low cost of transactions on Solana make it suitable for handling the potentially large volume of transactions in a global air rights marketplace.

How could SkyTrade's platform facilitate drone delivery services?

SkyTrade's platform could significantly facilitate drone delivery services by providing a streamlined way for drone operators to secure the necessary airspace rights. Currently, one of the major hurdles for drone delivery is obtaining permission to fly through private airspace. By creating a marketplace where property owners can easily monetize their airspace and drone operators can efficiently acquire or lease flight paths, SkyTrade could help accelerate the adoption of drone delivery networks. The platform also includes features like the Radar app, which helps track drone activity and ensure compliance with air rights ownership.

What are the potential environmental impacts of monetizing airspace?

The monetization of airspace and facilitation of drone delivery networks have both potential positive and negative environmental impacts. On the positive side, drone deliveries could reduce ground-based traffic and associated emissions. However, the proliferation of aerial vehicles could impact wildlife, particularly birds, and contribute to noise pollution. SkyTrade's platform could help mitigate these concerns by enabling the creation of no-fly zones over sensitive ecological areas, facilitating time-based restrictions to reduce noise during certain hours, and providing data to help optimize flight paths and minimize environmental impact.

How does SkyTrade address privacy and security concerns related to increased drone activity?

SkyTrade addresses privacy and security concerns related to increased drone activity in several ways. The platform enables property owners to set privacy zones or no-fly areas above their land, giving them control over their airspace. SkyTrade also implements secure identity verification for air rights transactions and provides tools for tracking and auditing drone activity in specific areas. Additionally, the company collaborates with regulators to develop best practices for protecting privacy in the age of aerial vehicles. By giving property owners control and financial incentives, SkyTrade aims to increase public acceptance of drone activity while addressing privacy concerns.

What is the current state of drone delivery services in the United States?

As of the discussion, approximately 30 Walmart stores in the United States offer drone delivery services. These operations are primarily in smaller towns and suburban areas where logistics are simpler. Additionally, there are a few other companies and restaurants testing drone deliveries in various locations. The Federal Aviation Administration (FAA) has begun issuing licenses for beyond visual line of sight drone operations, which is expected to accelerate the growth of drone delivery networks. However, these services are still in the early stages of deployment and face various regulatory and logistical challenges.

What are the main challenges for the development of flying cars or air taxis?

The development of flying cars or air taxis faces several significant challenges. One of the primary issues is power source and efficiency. Current battery technology is often seen as inadequate due to weight and power constraints, with aviation fuel still being much more efficient for flight. Alternative power sources like hydrogen or new propulsion technologies may be necessary. Safety is another major concern, with the bar for passenger-carrying aerial vehicles being extremely high. Regulatory hurdles also pose challenges, although there has been some progress in this area. Additionally, the current focus on airport-to-city-center routes may be misguided, with inter-town transportation potentially offering more value and easier implementation.