SPECIAL REPORT: LAND DEVELOPMENT
Land of opportunity G
Are airports making maximum use of their available land? Matthew Taylor considers how an airport can leverage its commercial real estate.
lobal economic challenges and changing airline industry dynamics are intensifying fi nancial pressure on the world’s airports. One effective source of relief leverages one of the airport’s most visible assets – land.
While the concept of deploying land to generate revenues is not novel, a
renewed focus by airports on this sometimes under-utilised, but mostly hibernating asset is particularly attractive today given funding constraints and emerging market opportunities. Leveraging an airport’s real estate portfolio offers numerous benefi ts
beyond just a new revenue source. Airport real estate values are improved and residual assets are created while also expanding the community’s property tax base and job market. For these reasons and others, airports continue to assume an ever-
increasing role of importance in their communities. The question is generally not if commercial land development can occur
on airport, but rather what should be developed, where and when. Whether an airport was originally sited on the exurban fringes at a
greenfi eld site or in a more urban infi ll context, the private market has come, and is coming, to the shores of these economic gateways. From professional offi ce and industrial uses to retail, restaurants and
hotels, airports have historically attracted compatible land uses to their perimeters, effectively creating transitions to community neighbourhoods expanding outward from the centre city. Commercial corridors have become the market’s preferred transition
zones between airplanes and residential rooftops, creating opportunities for airports. To date, much of the commercial development has occurred external to
airport lands along access corridors and airport boundaries. Now, the market’s growing demand for both larger tracts and smaller key development sites closer to the airport itself affords airports the ability to generate new revenue by leveraging land assets.
36 AIRPORT WORLD/FEBRUARY-MARCH 2011 At Orlando International Airport and Orlando Executive Airport in Florida,
Orlando-based RERC Strategic Advisors has worked with the Greater Orlando Aviation Authority (GOAA) to identify and leverage commercial property opportunities from among more than 15,000 acres (6,070 hectares) at the two locations. In 2009, Orlando International Airport ranked 27th in the world in total
passengers and currently has the third largest land holdings of any US airport. During the past two decades, RERC’s assignments have resulted in
positioning airport assets totalling nearly 4,000 acres (1,620 hectares) of existing and/or planned commercial development. At Orlando Executive Airport, revenues to GOAA from commercial
development – which includes retail shopping centres, movie theatres, outparcel restaurants and other commercial uses – now comprise approximately 73% of total revenues. At Orlando International Airport, 11.5% of total revenues come from
commercial leasing activity. To keep GOAA’s real estate portfolio relevant, RERC is now identifying
redevelopment strategies for older, underperforming commercial areas constructed more than 30 years ago to extract the current highest and best use for revenue purposes as ground leases approach expiration. So where do you start? Experience suggests fi ve essential steps to
leveraging an airport’s commercial property within an overall master real estate strategy. First, what do you have to work with? Conduct a portfolio review of existing
land assets including an inventory of aviation and non-aviation lands to identify possible available vacant or redevelopment parcels for the marketplace. The process recognises that airports intrinsically require adequate land for
operational areas and future aviation-related growth and development. Your goal in this process is to understand the relative advantages and
limitations of the commercial land. An airport’s locational advantages are usually balanced by restrictions placed on its lands by regulatory agencies.
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