Monday, September 24, 2018
Business

Tampa International Airport morphing into a mini-city unto itself

TAMPA — By the end of the 2026, Joe Lopano wants Tampa International Airport to function as its own little city.

By then, airport officials would have spent more than $2 billion on improvements and new amenities in the terminals and around the airport property as part of a master plan overhaul. The airport would become the landlord not only of nearby International Plaza, which sits on airport-owned land, but also to a host of hotels and office buildings, retailers and restaurants even closer to the terminals.

Travelers will be able to work from airport property, if they want to lease an office space there. They can dine or shop at restaurants and retail stores, gas up at a new gas station, and walk down the pedestrian trails back to one of two hotels. You'll never have to leave the airport's 17-acre enclave, which will offer all the amenities of a mall or business district.

Through the next phase of its master plan, the Tampa airport is getting deeper into the real estate development business. It's a trend that airports and ports, like Port Tampa Bay, have been exploring for years. By developing and leasing out desirable lots of land for commercial uses, these transportation agencies are creating new and longterm revenue streams."What you're witnessing is the evolution of the airport model," said Lopano, the CEO of the Tampa airport. "When we were just a parking lot for airplanes, planes served food so travelers didn't have a need for that in the airport. Now we're a mini mall that offers plane departures. This is the next evolution of that — this is land that's not needed for aviation purposes but can used for something else to create new revenue."

The centerpiece of the $543 million phase two of Tampa International Airport's master plan is a 17-acre commercial development officials are calling the "Gateway" area, which includes plans for up to two hotels, an eight-story, 240,000-square-foot office building, a 20,000-square-foot retail strip and a gas station with a convenience store. It will be located next to the economy parking garage and accessible to the main terminal through the airport's people mover train, which will be completed later this year.

Previous Coverage: Tampa International Airport board approves next part of massive expansion (w/video)

Some of that office space will be leased back to the aviation authority and its employees. But the airport plans to hire a developer to build it, then lease space to office, retail and restaurant tenants, maybe even a pet hotel. It's not clear yet which hotel chains might be interested in coming to the airport.

"This creates new opportunities for us," Lopano said. "We're always looking for ways to expand our revenue base beyond just one thing. Right now we have strong revenue in parking fees, rental car fees, food, beverage and retail. And soon, more real estate."

Analysts say it's a natural transition for airports to lease and develop land they own because more traditional revenue streams are strained or limited. Lopano has been vocal about encouraging Congress to raise the passenger facility charge, a user fee that travelers pay when flying in or out of a specific airport, and airports in turn put toward projects and improvements. Local aviation authority boards decide how high a fee to place on passengers, but currently cannot exceed the $4.50 cap. Both TIA and St. Pete-Clearwater International Airport have maxed out PFC fees at $4.50 per passenger.

"They have to get into the development business. Airport are economic generators that have all this land. It's the perfect place for this kind of investment and often attracts businesses to the region," said Michael Boyd, with Boyd Group International, an aviation consulting firm in Colorado. "Historically business has grown up around airports, but it's always been passive. Now airports want a piece of this action. Nearly every airport has a development plan these days."

Flagstaff Pulliam Airport in Arizona recently agreed to sell 32 acres of land to a Chinese hotel developer, which will build a hotel, conference center, and its U.S. corporate headquarters there. Not far from the Golden Triangle Regional Airport in Mississippi, Japanese Yokohama Tire opened a $300 million factory.

"Throughout the world there are very successful examples of this," Lopano said. "It's quite dependent on much land you have. In Dallas (where he worked previously) we had 18,000 acres of land. That helped bring commercial warehousing and car dealerships who would rent the land from the airport, which was close to the highway."

Lopano says that the Tampa airport has similar appeal. That's what drew James Judge, a public relations specialist to move his offices there in November. He leases space through the Tampa Airport Marriott, which he said was far more affordable than downtown Tampa and other office hot spots in the region.

"We have everything we need here," says Judge, president of Judge Public Relations. "We have a bank, a post office, Starbucks and restaurants all right here in walking distance. Plus a permanent parking spot right at the airport."

He said it's a perk for his clients too, who can travel for just one day to Tampa for meetings.

Previous Coverage: Tampa International Airport details $543 million second phase of massive construction plan

"Overall, this enhances the passenger experience. Consumers have come to expect entertainment, restaurants and hotels when they fly into an airport. It's often an economic boost to the surrounding areas, too," said John Kasarda, an airport business consultant who literally wrote the book on airport cities. His book is called Aerotropolis.

"Good airport cities attract more passengers than those with less amenities," he said. "It's where businesses want to be now. It's not only good business rationale, but it contributes to the greater metro economy."

Contact Justine Griffin at [email protected] or (727) 893-8467. Follow @SunBizGriffin.

 
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