Airport land comes into play
Indianapolis-based Scannell Properties last week nailed down a 50- year lease on land owned by the Airport Authority of Washoe County.
Scannell plans to develop a distribution facility on part of the 38-acre parcel bounded by Longley Lane, Rock Boulevard and East McCarran.
Trammell Crow Co., meanwhile, will to work with Scannell to develop industrial or distribution buildings on the remainder of the land.
Par Tolles, the company’s area director in Reno, said the buildings either will be speculative or built to order for tenants.
The deal is yet another indication of the importance that airport-owned land will take as raw land becomes increasingly scarce in the Truckee Meadows.
“It’s very significant considering how little land is left to purchase,” said Paul Perkins, senior vice president in the industrial properties group of Colliers International.
“For companies that want to be in the Truckee Meadows, there just isn’t much to buy.”
The airport’s holdings are significant about 500 acres available for development around the Reno-Tahoe International Airport.
Along with the 38 acres Scannell Properties and Trammel Crow plan to develop on the east side of the airport, another priority for airport officials is a 60-acre tract along South McCarran.
By spring, airport executives hope to be calling for proposals from developers to submit master development plans for the area, said Joan Dees, senior director of finance and administration for the airport authority.
She said the property probably will be developed for light industrial uses.
The airport isn’t selling its land holdings outright because it acquired most of the parcels with federal grants that forbid the airport from turning around and selling the land, said Dees.
Even more important, she said the airport wants to control the development that occurs on its land to ensure that conflicts don’t arise with flight operations.
In some instances, the airport authority also wants to control the appearance of nearby development.
Among the land holdings available for lease, for instance, is a vacant 11-acre parcel along Plumb Lane at the entrance to the airport.
Airport officials hope the site, once home to a General Car Rental operation, might be developed as office or hotel space.
“Because it’s at the entrance to the airport, we want it to be pretty upscale,” Dees said.
Lease rates are determined after an appraisal of the land and negotiations with developers, she said.
The airport targets a 10 percent capitalization rate on the appraised value of the property.
While the leases are important to companies looking for industrial land in the Truckee Meadows, they also may be an important source of revenue for the airport.
Rental revenue helps hold down the landing fees the airport charges air carriers, and lower landing fees help keep the airport competitive in attracting new service.
The lease Scannell Properties signed with the airport authority, for instance, will generate well over $350,000 a year for the airport 28 cents a square foot for buildable land and 18 cents for land were building is forbidden.
On an appraisal of $3 a square foot, that’s a capitalization rate a bit over 9 percent.
Seven acres of the land can’t be used for buildings, although Scannell Properties plans parking areas on that part of the property.
Practical limitations and psychological concerns may dampen some enthusiasm for the airport land.
Of the two, psychological issues may be the most troublesome, Perkins said.
In a market in which land leases have been rare, some companies may hesitate to build a longstanding structure on land they don’t own.
But, Perkins noted, the 50-year term of the leases available from the airport authority helps calm those worries.
“They’re not going to care in 50 years,” he said.
Practical consideration, meanwhile, limit some of the options for developing the land.
Obviously, Dees said, residential development of the land is out of the question because of noise considerations.
Building heights are limited to protect aircraft.
Some of the airport-owned property includes runway protection zones in which nothing can be built.
Even so, Perkins said, developers and property owners can work around those restrictions.
Financing arrangements on structures built on leased land also look somewhat different from traditional construction, Tolles said.
Because the land is leased, the overall value of a project probably is somewhat less than a project where the land is owned outright.
That,Tolles said, will affect the amount lenders are willing to provide.
R Supply, which built a 70,000- square-foot facility on 10 acres it holds through a 50-year lease from the airport, pioneered the recent push onto airport land.
The facility at 1095 S.
is being developed by Panattoni Development and built by Panattoni Construction.
Officials with Fuentes Restaurant and Cantina, Axle Crossfit, Gather, Loved Momma Fitness, Rowdy Bar and Silver Strike Crossfit discuss challenges — and opportunities — due to the pandemic.