Airports predicted to become urban epicenters

International airports are increasingly serving as a magnet for commercial development, and could rival traditional downtown central business districts as the core of economic activity in urban areas, according to an industry expert at the recent Urban Land Institute annual fall meeting.

John D. Kasarda, director of The Kenan Institute of Private Enterprise in Chapel Hill, N.C., discussed the evolution of the "aerotropolis," in which mixed-use developments combining office, retail, and entertainment facilities and even some housing are being placed strategically around airports, effectively creating an "airport city" out of what was once merely a city airport.

"Air logistics is creating a new urban form. ...

"The time and cost of moving people and goods to and from the airport is becoming the new factor for determining property value. The key real estate principle of location, location, location is being replaced by accessibility, accessibility, accessibility," Kasarda said.

According to Kasarda, airports represent the "fifth wave" of changes in transportation infrastructure that have shaped commercial development over the past three centuries: the first being seaports; the second, rivers and canals; the third, railroads; and the fourth, highways. "Aviation will drive development in the 21st century the ways cars did in the 20th century," he predicted.

Airports will be catalysts for development despite a decline in air travel and financial woes for airline passenger carriers, Kasarda maintained. He attributed this growth to a rise in air cargo traffic, which has been fueled by a surge in "just-in-time" delivery of goods purchased through electronic commerce.

For instance, 70 percent of all goods sold through the Internet are shipped through express delivery; and 65 percent of the air cargo in the United States is express delivery. Moreover, world air cargo traffic is expected to triple during the next 18 years, he noted.

The rising use of air delivery is due to several factors, including the prevalence of jumbo, high-speed jets; speed and agility becoming as critical as quality and price; increased corporate globalization in which companies can "sell to anyone, anywhere, anytime"; increased customer demand for customized products delivered quickly; and rapidly changing demand and supply conditions, Kasarda noted. "These are the new business realities," he said.

He cited the economic impact of several international airports:

Los Angeles International, which generates 400,000 jobs in five counties and $60 billion annually in regional economic activity;

Dallas-Ft. Worth Airport, where a growing metroplex has drawn hundreds of technology-related companies, and a huge market center with clothing and home furnishings generating billions of dollars in sales; and

The Subic Bay, Phillipines, airport, which has attracted 150 new firms, generated $2.5 billion in commercial real estate investments, and experienced a surge in annual exports, from $24 million to $599 million annually.

The evolution of the aerotropolis is characterized by distinct clusters of aviation-linked businesses jutting out five to 20 miles from the airport, which are, or should be, connected to the airport by dedicated expressways and rail systems, Kasarda said.

Some of the businesses locating next to airports are companies specializing in freight forwarding and third-party logistics companies; electronic commerce fulfillment centers; product assembly companies; firms selling perishable items; high-technology industries; and regional headquarters offices, he said. Such firms are starting to replace other companies whose products or services have little or no relation to the airport.

"I still see heavy equipment dealers just outside the airport. But, at some pointthat property will be purchased by those (firms) with a function more compatible with the airport," he said.

In many cases, the value of properties linked to airports is rising faster than properties in other urban locations, including central business districts, Kasarda added.

In addition to Dallas-Ft. Worth, airport cities or "aerotropoli" are either being built or planned in Ontario, Calif.; Detroit; Paris; Campinas, Brazil; Seoul, Korea; and Hong Kong, he said.

Along with the businesses tied directly to air cargo, other land uses oriented around airports include offices, shopping, arcades, themed restaurants, golf courses, biking trails and hotels. The inclusion of housing in airport cities is the most challenging aspect of such developments, he said, noting that residential units need to be more insulated from traffic flow going into and out of the airport.

Moreover, resistance from existing community residents who may oppose a new runway, much less additional businesses, more delivery trucks and more roads is "an issue," Kasarda said. "This (aerotropolis development) will take decades to work out. It's a matter of balancing the community interests with the role of the airport and what it plays in the local economy," he said.