Retail
Image courtesy of Athens International Airport.
> S Rewarding retail
Chris LeTourneur and Andrew Fayn report on the growing trend of airports opening shopping malls and other retail facilities.
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 specifically 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 financial crisis, with retail and
34 Issue 1, Volume 5
commercial developers having found it difficulty to rely on traditional equity and lending sources for finance.
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 financing. 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. Vancouver International Airport (YVR) 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 YVR, is exploring the opportunities for the organisation to become an active joint venture partner in the development of the Russ Baker Corridor. “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-Pacific region.” The 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.
GLOBAL AIRPORT CITIES
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