SPECIAL REPORT: LAND DEVELOPMENT
Chris LeTourneur and Andrew Fayn report on the growing trend of opening shopping malls and other retail facilities on airport sites.
Destination retail
S
ince the rise of commercial aviation during the mid-twentieth century, airports have become integral components of the economic activity of urban settings.
The contribution of airports to local economic activity was traditionally
oriented around their gateway for people and products, but in the last decade, the pursuit of non-aeronautical revenues has resulted in many airports leveraging their property assets to generate commercial development activity. Increasingly, airports are becoming more involved in the development of
retail facilities on land not required for aviation use in order to recognise short and long-term revenues associated with such development. Newer international airports such as at Denver, Edmonton and Athens
were specifi cally located outside of their respective urban cores to take advantage of large tracts of available land that will ultimately accommodate not only traditional airside and terminal functions and expansions, but also to foster ‘regional destination retail’ and commercial development on and around the airport lands. This activity has been accelerated by the global fi nancial crisis, whereby
retail and commercial developers have had diffi culty relying on traditional equity and lending sources to fi nance their projects. On the other hand, by the nature of most airports to maintain ownership of
their lands and offer them through ground leases to developers or by building leases to end-user tenants, ‘destination retail development’ on airport lands has become attractive for traditional retail and commercial developers. What makes this prospect particularly appealing is that airport authorities
have the ability to service and contribute land, leverage their strong credit position and have access to competitive fi nancing. The natural progression for airport authorities is to become active joint venture development partners in the planning, servicing, marketing, construction and operating of destination retail and commercial facilities on airport lands. At Vancouver International Airport (YVR) in British Columbia, Canada,
48 AIRPORT WORLD/FEBRUARY-MARCH 2011
the Vancouver Airport Authority is moving in this direction with the announcement of a planned destination retail project on its Russ Baker Way commercial corridor property. Managed by the Airport Authority, the airport lands are the subject of a
ground lease with the Federal Government (Transport Canada), as is the case at all major airports across Canada. As with its successful aeronautical development, Vancouver Airport Authority is taking a leadership position with the planned development of the Russ Baker Corridor. Ray Segat, director of business and land development for Vancouver
Airport Authority, is exploring the opportunities for the organisation to become an active joint venture partner in the development of the Russ Baker Corridor property. “We see a compelling opportunity with our Russ Baker Way property to
develop a destination retail, dining and entertainment centre that will be unique to Metro Vancouver,” says Segat. “This new concept will invigorate the region’s urban retail offerings, while it supports continued growth of Vancouver International Airport as the premier gateway to the Asia-Pacifi c region.” The Russ Baker Way property has already garnered the interest of many
recognised North American developers, who are intrigued by the prospect of proximity to the airport, the destination appeal of such a regional site, the development deal structure approach and the fact that these lands represent some of the only undeveloped commercial properties within the Metro Vancouver urban area. To facilitate commercial development adjacent to airport terminal
buildings, airports have the ability to create land use and zoning legislation. Local governments have followed suit by adjusting zoning designations for airport proximate lands to complement the retail and commercial destinations evolving on airport lands. In terms of the target market audiences for destination retail
development on and around airport lands, there are two distinct groups.
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