Aerotropolis is key to global competition
he land of opportunity is just an airport away. And you don’t have to board a plane to get there.
The aerotropolis is a new form of airport-centric commercial development that has transformed city airports into airport cities. It positions airports as 21st century drivers of business location, urban economic growth and global economic integration. And it can spark an ailing real estate sector.
The concept was created by John D. Kasarda, is the leading developer of this idea. He is the Kenan Distinguished Professor of strategy and entrepreneurship and director of the Kenan Institute of Private Enterprise at the University of North Carolina’s Kenan-Flagler Business School.
As Kasarda has researched this development around the world, he has seen how airports are evolving from transportation and supply chain-focused areas into mixed-use commercial centers. They meet the needs of both consumers and businesses: hospitality, entertainment, retail, office, meetings, exhibitions and conventions. And as a result, real estate professionals are taking a more strategic look at emerging opportunities in airport areas.
Aerotropoli are most prevalent in Europe, Asia and the Middle East. They are taking hold in U.S. cities such as Atlanta, Detroit, Memphis and Philadelphia leverage their airport areas with strategic, multi-use developments.
Interest is fueled by the huge numbers of people—often up to 300,000 including passengers and airport employees—who converge on airports every day. But the needs of business might be the most powerful driver, Kasarda’s research shows:
• Supply chains that move the world economy
• Projected growth in tourism from Brazil, Russia, India and China (BRIC)
• Continuing need for face-to-face business meetings
• Increasing demand for fast-shipping and fulfillment
The aerotropolis is the physical Internet that ties these together. It connects a metro region to the global economy, especially flows of time-sensitive products such as microelectronics, pharmaceuticals, aerospace equipment, medical instruments, and high-value perishables. The airport and its immediate environs are central nodes in such national and global movements.
Ready for HQ or mixed-use development
Choosing to locate near an airport that has extensive flight networks makes sense for a variety of organization types. Time-critical manufacturing, repair and distribution facilities are better able to meet their speed and agility requirements. Corporate headquarters, trade offices, professional associations and information-intensive firms with frequently traveling business people value the proximity.
Amsterdam Zuidas (AZ), located six minutes from Schiphol’s terminal, houses the world headquarters of ABN Amro and ING banks. The city of Las Colinas, just east of Dallas-Fort Worth International Airport (DFW), is the global headquarters of four Fortune 500 companies and 2,000 other firms. The Dulles International Airport area contains more Class-A office space than downtown Washington, D.C.
Employment growth and demand for commercial space in airport areas is as strong as any part of the metropolitan area, and stronger than most, Kasarda’s research shows. This creates opportunities for new development.
As more businesses set up shop near the airport, demand increases for employees. And those employees need places to live, shop and eat.
In addition to its 20-million-square-foot commercial space, AZ has more than 9,000 multifamily residences. More than $6 billion has been invested in creating residential density and commercial property in the airport area of Memphis, one of the first U.S. cities to adopt the aerotropolis model.
With a growing number of airports employing 50,000 or more workers, Kasarda’s works confirms that airport areas present a clear opening for mixed-use and multifamily developers.
Big box retailers and wholesalers traditionally located near airports because land was cheaper.
Today, these sites are in demand for another reason: affluent visitors. About 30 to 90 million people visit large airports annually, which significantly outweighs the 8 to 12 million who visit malls each year. And most of them have incomes considerably greater than the national average. As a result, major airport retail sales-per-square-foot are up to five times that of malls or central business districts.
Airport terminals have immense commercial potential, Kasarda’s research shows. Concourses are evolving away from newsstands and fast food restaurants. Now they include high-end retailers, upscale eateries, meeting space and other amenities that cater to hundreds of thousands of visitors daily in the largest airports.