SPECIAL REPORT: LAND DEVELOPMENT
Demographic trends for subject site vs selected properties Subject site
OEA Colonial Properties
Population
Estimated 5 year Population growth
Median household Income
Average household Income
3 Mile Radius 5 Mile Radius
3 Mile Radius 5 Mile Radius
3 Mile Radius 5 Mile Radius
3 Mile Radius 5 Mile Radius
Competitive advantage Occasionally, stakeholders are concerned an airport trade area will
outpace the growth and development of a central business district (CBD) and therefore lead to decline in that CBD. Unless that CBD makes a conscious decision to disinvest in its own future,
both employment centres will continue to attract demand and a more favourable investment environment, which promotes market development within the corridor and thus a link between the two commercial centres will likely exist. The fourth step focuses on positioning property for the marketplace once
the airport identifi es its land development opportunities through self- introspection and external market and stakeholder realities. This step includes conducting due diligence related to property surveying,
site conditions, infrastructure availability and needs, environmental assessment and cost estimating. It also investigates whether the available property meets the specifi c site
requirements of the marketplace, which may include access, utilities, site confi guration and topography, among others. Conceptual site planning and securing land use regulatory approvals must
also be completed. Upfront investment costs become evident as a result of these due diligence activities. A development strategy must then be evaluated as to what investments
will be made by the airport, versus a selected private developer, and what anticipated cash fl ow and returns are reasonable for each party. This cost-benefi t analysis informed by market timing is crucial to support
an airport’s decision whether to pursue a specifi c project. As a fi nal step, an implementation strategy must be selected now that a
commercial development site and concept have been defi ned by market and stakeholder realities and calibrated by due diligence activities. An airport may choose to self-perform or partner with the private sector. While self-performing provides more control for the airport, it comes with
greater inherent risks. For those assumed risks, the airport typically has a greater potential fi nancial upside. This ‘do it yourself’ strategy offers the potential to achieve a prevailing
market rate of return, but given that airports have limited capital, a public- private initiative leveraging private equity may be a more balanced approach.
38 AIRPORT WORLD/FEBRUARY-MARCH 2011
106,855 288,596,
6.89% 4.30%
The Loop 76,476 184,436
18.97% 18.59%
$45,494 $48,424 $44,798 $51,585
$63,758 $56,964 $61,874
$56,077
Marketplace at Seminole Town Centre
38,213 104,820
27.68% 18.86%
52,792 160,822 1.2% 2.00%
$72,635 $35,732 $59,653 $41,079
$95,939 $54,929 $83,261
Competitive disadvantage A public-private initiative creates shared risks and control for both an airport
and private developer. The rate of return for the development project is negotiated in advance and the airport is able to leverage outside private equity to achieve its goals and objectives for deploying its land asset more optimally. To enter a partnership with an airport, commercial developers require,
among other things, market support for the project, a defi ned review and approval process, timelines, minimum lease terms to meet the fi nancing criteria of lending institutions, and predictability in future land value (and therefore tenant rents). Should an airport choose to self-perform a development project, then
outsourcing the marketing of such a project to commercial brokers active in the marketplace can leverage existing broker networks to gain greater exposure to commercial tenants at a fraction of the marketing time and costs. To work with the commercial brokerage community, an airport should
adopt a formal broker compensation policy and commission structure matching the prevailing local market and standard practices. A clear understanding of the airport’s leasing process and timelines for
successful negotiations as well as opportunities for brokers to be in both exclusive and non-exclusive roles are keys to a mutually benefi cial relationship. For aviation development sites, airports retain a competitive advantage for
marketing those on their own given these sites are central to an airport’s core mission and in-house expertise. Recent global economic affairs have prompted airport leaders to rethink
under-utilised commercial land under their control. With signs that real estate markets are beginning to thaw, now is the time
to activate your airport’s land assets to capitalise on evolving market forces. Today’s financial constraints in the aviation industry require innovative
thinking to find non-traditional revenue sources to stabilise and secure the successful operation of your community’s greatest asset. What are you waiting for?
About the author Matthew S Taylor is CEO of Orlando-based real estate strategy and economic advisory services company RERC Strategic Advisors (
www.RERCInc.com).
AW $60,938
Waterford
Terrace at the Lakes Town Florida Mall
Centre 77,953 164,979
12.70% 9.6%
$50,532 $52,443
$64,103 $66,832
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