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OCR for page 1
STRATEGIES FOR REUSE OF UNDERUTILIZED OR
VACANT AIRPORT FACILITIES
SUMMARY As the airline industry continues to consolidate and strives to achieve greater efficiencies
and lower costs, airports are responding to an environment in which demand (and rent) for
facilities is not only less predictable, but often reduced, sometimes at short notice. Bank-
ruptcies, mergers, and capacity cuts have resulted in reduced occupancy of terminals and
concourses and in terminated leases on a variety of buildings, including maintenance and
cargo facilities, hangars, catering kitchens, and other support centers.
This report presents an overview of the issues surrounding reuse of aeronautical facilities.
Information used for this synthesis was gathered through a series of case studies and inter-
views with airport directors, property managers, and community economic development
agencies. The report includes a broad examination of reuse situations that address interim
and long-term solutions to reuse, the decision process to maintain or demolish a structure,
environmental and regulatory issues, success stories, and obstacles to effective reuse.
The following is an overview of synthesis findings:
· The occurrence of airport building vacancies and obsolescence is widespread but is
reported primarily at the individual airport level. This synthesis is one of the first
compilations of how airports of different sizes and missions have addressed vacant
and underutilized properties.
· Although expiration of leases or changes in ownership of tenant companies are com-
mon with any property management, vacancies that arise out of airline bankruptcies
often result in sudden and relatively large reductions in airport revenue. Unexpected
vacancies also cause urgent efforts by airport sponsors to find replacement tenants.
In addition, bankruptcy proceedings can delay resolution of ownership and disposi-
tion of financial obligations on a property. Airport sponsors may find themselves
assuming the cost and responsibility for maintaining a facility until these issues are
resolved.
· Reuse of specialized aeronautical facilities is complex because of issues of air-
field security, FAA grant obligations, airline operating agreements, environmental
cleanup, stakeholder support, and market conditions.
· Expenses associated with upkeep, environmental mitigation, and rehabilitation of old
facilities can make demolition the lowest-cost option.
· Unless there is already a demolition plan and budget in place, many airport sponsors
will bear the cost of maintaining a building for what can be several years. Airports
have rolled the cost of demolishing a property into a new construction project on the
site, but during the recent recession, many capital projects have been postponed and
as a consequence, vacant buildings slated for demolition remain on the airport.
· Vacancies may create opportunities for airport entrepreneurial ventures; however,
based on the case studies reviewed for this synthesis, revenue replication is often
difficult to achieve.
· Reuse typically takes years to accomplish. Initial ideas may turn out to be interim
solutions.
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· The experience of vacancies and underutilized facilities has led airport sponsors to
consider a number of changes to design standards that will incorporate the flexibility
to expand or contract a building footprint or allow for subdivision of properties.
· Some airports are also integrating review of vacancy risk and response plans into their
Enterprise Risk Management (ERM) programs. (ACRP 01-18 is an active project that
examines the application of ERM at airports.)
· Airports are also considering requiring a tenant to offer a security deposit such as a let-
ter of credit that designates the airport as a third-party beneficiary. This letter of credit
would not be subject to bankruptcy proceedings and could be available to maintain or
demolish a building in the event of tenant bankruptcy. As a matter of practice, letters
of credit for airport leases are currently rare.
· The synthesis contains several useful examples of reuse of military bases, a former
terminal, a cargo facility, a training facility, and property redevelopment. The unifying
features of these case studies are inspired leadership, a vision and comprehensive plan,
willingness to cut losses and identify the best reuse prospects, effective use of grants
and local resources, active marketing, and patience.
