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LESSONS LEARNED to implementation of reuse were the lack of clear direction
in the immediate aftermath of United's rejection of its OMC
The Port of Oakland has applied a number of ingenious strat- lease. Because the airport had experienced robust growth
egies to make the most of the OMC office and storage space during 20032007, the Port of Oakland had expectations
and generate advertising revenues from its highly visible that the airport would continue to grow and need space for
location. That said, the age of the facility, the cost of demo- expansion. The economic crisis that began in 2008 severely
lition, and difficulties finding a replacement tenant make impacted the Port of Oakland's finances and the airport's
this case study particularly illustrative of the challenges an need to develop a third terminal complex.
airport can face when a specialized facility reverts to the
airport sponsor through a tenant bankruptcy. Options are influenced by the economic outlook. Ter-
mination of the United lease took place at a time of rapid
The cost of keeping a building maintained may exceed growth at OAK. The future of the OMC became bundled
the cost of demolition. The OMC has been vacant for with a long-term expansion plan for construction of new
more than 7 years and the Port of Oakland has expended cargo facilities to accommodate development of a third ter-
in excess of $7 million in maintenance, repair, utilities, minal. Had the Port of Oakland recovered the OMC from
insurance, and other building-related costs. Conversely, United in 2008 (vs. United's 2003 lease rejection), it may
the Port of Oakland has offset some of these expenses by have considered a different set of options, including imme-
using the office space for staff and consultants, using the diate demolition or funding thereof in connection with the
hangar bays for storage, and using the facades for outdoor bankruptcy settlement (if possible).
(mega-billboard) advertising.
Industry trends are important to consider when making
In retrospect, it appears that it would have been more cost reuse decisions. Airlines jettison outdated facilities during
effective to have demolished the OMC soon after its abandon- bankruptcy. Because United consolidated its maintenance
ment by United. Therefore, failure to adopt a reuse strategy-- operations at SFO it may have been a signal to the Port of
including a demolition option--has resulted in significant Oakland that the OMC was no longer viable for aircraft
upkeep expenses. Exercising the demolition option would maintenance for United or other domestic airlines.
have provided a "green field" for future development of avia-
tion-related facilities with direct airside access. It is prudent for other airports undertaking reuse of older
facilities to take the shortest time necessary to develop a
Clear and immediate direction about reuse is important. reuse (including demolition) plan and then execute the plan.
Inaction is expensive. The biggest obstacles and challenges Inaction can be very expensive.
