Airport City at MIA Joins the Ranks of Other Global 'Aerotropolises'

Airport City at MIA Joins the Ranks of Other Global 'Aerotropolises'

Commercial News » North America Commercial News Edition | By Hortense Leon | February 19, 2013 8:00 AM ET

A plan for a 33-acre development--- including hotels, meeting space, office space and restaurants--  known as Airport City at MIA--is not unlike other developments in and near airports in the US and around the world known as "aerotropolises." These mini-cities are similar in form and function to traditional metropolises, but center around airports, rather than central cities. 

In launching the Airport City project, Miami is joining the ranks of Dublin, Frankfurt, Amsterdam, Dubai, Singapore and Hong Kong, according to Odebrecht USA, the Coral Gables-based affiliate of the Brazilian-based Odebrecht Organization, the contractor that will lead the development. The company will be responsible for all of the project's financing, construction, and operational expenses and the county's aviation department will share in project revenues, according to a statement put out by Odebrecht USA.

Other cities in the US that are developing, or are about to develop, similar projects include the Aurora/Denver, Colorado and Atlanta metros. The concept of "aerotropolis" was first coined by Dr. John Kasarda, a University of North Carolina professor and director of the Center for Air Commerce at UNC's Kenan Institute for Private Enterprise. According to his philosophy, when regions and/or countries make better use of airport lands and land surrounding airports, it becomes easier for businesses to participate in the global economy. As increasing numbers of businesses and commercial service providers cluster around airports, the aerotropolis becomes a major urban destination, but these areas must follow principals of urban planning, says Kasarda. 

Airport City at MIA, the plans for which were unveiled last Wednesday, will be anchored by a hospitality center with a four-star hotel and conference center, linked to the terminals. The construction budget for the project is estimated at $512 million and its payroll impact is estimated at $827 million.  Miami's Airport City will be privately funded, but built on land leased from Miami-Dade County.

The business park portion of Airport City will have up to one million square feet of primarily Class A office space, a 150 to 300-room limited-service hotel, retail and restaurant facilities and an MIA People Mover Station.

The Airport City concession, under the ground lease agreements, consists of a 40-year initial-term lease plus an optional 10-year extension. Miami-Dade County, through its aviation department, will receive rent for the county land and additional payments in the form of percentages of certain gross revenues generated on the parcels.

The Airport City project is just getting started. Prospective partners for the retail and hotel portions of the development are in the negotiating stages, says Greg Chin, communications director for the Miami-Dade Aviation Department.

For every development like this there are a plus and a minus, says Tom Dixon, president of Dixon Commercial Real Estate in Miami. On the plus side, he says, the revenues generated by the project will help support the airport and could make it possible for landing fees to be lowered or at least not be raised in the future, which will make MIA more competitive with Ft. Lauderdale's airport, which has landing fees that are much lower than MIA's. Also, says Dixon, the more people that come into MIA, the better it is for the local economy.

"The land at MIA is valuable, but it is not being used to maximum potential, so it behooves (officials at the Miami-Dade County Aviation Department) to use that land efficiently," says Dixon. "Right now, we have about 1000 flights a day coming into the airport," he says. With the new development that number could grow to perhaps 1500 per day, says Dixon.

At the same time, says Dixon, as the airport expands its facilities and adds retail that will hurt businesses in the surrounding area. "If I had a hotel near the airport, I'd be nervous," he says. Plus, owners of buildings on airport land don't have to pay real estate taxes, which will give them a competitive advantage over other businesses, says Dixon. 

On the plus side: "Airport City may lift us up another tier and cement our reputation as an international destination in the way the Four Seasons and Ritz Carlton lifted the hotel industry," says Guy Trusty, president of Miami-based Lodging & Hospitality Realty Advisors.

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