RDU eyes development dollars
Posted March 21, 2014
Morrisville, N.C. — As Raleigh-Durham International Airport looks for new revenue, a consulting group says the airport could become a major player in the Triangle real estate market.
The Airport Authority heard a preliminary report Friday morning from the Urban Land Institute, a consulting group it hired for $125,000 last November to suggest possible uses for land owned by the airport but not needed for air services.
A group of ULI experts spent the week in the Triangle, researching the market and talking to more than 80 people, from local officials to developers to conservationists.
"It’s no secret that the airline industry has changed," said airport director Mike Landguth, citing recent consolidations of major carriers. "Airports can no longer rely on airlines as their sole source of revenue."
According to the FAA, airports around the country earned about 55 percent of their revenues from air service uses in 2012, with 45 percent coming from other sources, such as parking and retail vendors.
ULI's Mulu Birru said the FAA has mandated that airports explore ways to diversify their income, especially looking at developing excess property where it's available.
RDU owns far more land than most other airports in its class, according to ULI. Some 2,000 acres is considered "excess" property, outside the operational area and not planned for future use for air traffic or services.
ULI estimates RDU could develop about 6 million square feet of office, hotel or retail space on two parcels near Interstate 40 – one bordering Pleasant Grove Church Road and the other on the edge of Lake Crabtree south of the interstate.
ULI's Kate Collignon said that would make RDU "a significant player in the region in real estate."
The consulting group says the surrounding market makes multifamily and office space a less-than-ideal fit, although that could change in the coming years. Instead, it's recommending the airport look into developing a high-end business hotel, multi-purpose warehouse space and, in the longer term, an office campus with retail and restaurants, similar to Google's campus in Silicon Valley.
Collignon said community members whom ULI interviewed also suggested other possible uses for other parcels of airport land: venues for aerospace education, community sports and other events; an aviation museum; support services for military personnel; even a high-tech amusement park or water park.
ULI Survey Leader John Walsh said transit/transportation is one of the most significant challenges development at RDU will face. While he said RDU has better highway access than most airports in its class, nearly every community leader or stakeholder ULI interviewed mentioned concerns about congestion.
The group's main recommendation to the Airport Authority is to plan any development carefully, far in advance and seek regional support.
One concern they'll need to address is environmental impact. Large areas of the airport's excess property are wetlands. The area near Lake Crabtree is used for stormwater mitigation. Some areas border on Umstead State Park.
But the consultants said the Triangle will continue to experience very high growth for the next few years. The Triangle had the highest level of in-migration in the country in 2013, according to ULI. It's projected to be the third-fastest-growing area in the country for 20- to 34-year-olds in the coming years, buoyed by a strong knowledge economy, clean tech, advanced manufacturing and biosciences.
Moody's is predicting 80,000 new jobs in the Triangle by 2017. Development, the consultants say, is inevitable.
"You can’t stop the half a million people that are going to move here in the next 15 years," Walsh said. "Transit and transportation must be a guiding principal to everything we do. There are not enough dollars in the system to take care of all the roads we need."
Landguth said Friday's presentation is "day one" in a planning process that could easily take a decade or more. ULI's final written report will be submitted to the authority board in 90 days. It will likely be several more months before the board is prepared to begin drafting any proposals of its own.