Dallas/Fort Worth International Airport Commercial Development Department Business Terms - How Do You Know It s a Good Deal

Transcription

1 Dallas/Fort Worth International Airport Commercial Development Department Business Terms - How Do You Know It s a Good Deal ACI-NA Airport Economic & Finance Conference April 7, 2009

2 Commercial Development DFW Airport - Business Overview DFW Land Use Plan Commercial Development Coordination Team (CDCT) Planning Department - Airport Image Elements Southgate Plaza Mixed-Use Development Objectives: Financial, Design/Development, Priorities Request for Qualifications (RFQ) Pre-Development Studies Proposed Design, Site Plan, Concept Ground Lease Controls 2

3 DFW Airport - Business Overview

4 DFW Airport Business Overview DFW Airport is a major catalyst to the regional economy. $16.6 billion in total annual economic impact 305,000 full-time jobs $7.6 billion in payroll annually Source: The Economic Impact of Dallas/Fort Worth International Airport 2005, Texas Department of Transportation 4

5 DFW Airport - Business Overview Growth in non-airline revenues reduces airline costs. Capital Transfers 5% Other 14% Parking 36% Airline Revenue 35% Non-Airline Revenue 65% Coverage Credit 5% Interest 6% $640 Million Budget Commercial Development 8% Rental Car Center 10% Concessions 16% Commercial Development is growing in importance. 5

6 DFW Airport - Business Overview DFW s CPE is very competitive. Cost Cost per per Enplaned Passenger Comparison - DFW DFW FY2009 FY09 = $7.73 = $7.73 Newark Miami New York (JFK) San Francisco New York (LGA) Boston Houston (Bush) Denver Seattle-Tacoma Chicago-O'Hare Los Angeles Philadelphia Dallas-Fort Worth Las Vegas Minneapolis-St. Paul Orlando Detroit Phoenix Atlanta Charlotte-Douglas $18.66 $17.51 $14.42 $14.15 $13.75 $13.37 $11.87 $11.73 $10.21 $9.52 $9.40 $7.73 $7.31 $6.15 $5.11 $5.08 $4.72 $3.08 $1.37 $22.50 $0 $5 $10 $15 $20 $25 Source: 2007 CPE's from ACI Survey and Jacobs Consulting enplanements adjusted for change in OAG seat volumes from Nov to Nov adjusted for 2% economic factor. 6

7 DFW Airport - Business Overview Commercial Development Typical Deal DFW responds to a commercial space user need for airport-related real estate For Industrial/Warehouse users, developer brings build-to-suit subtenant and leases land from DFW For retail and office users, DFW selects third party developer to build for mixed use subtenants by RFQ or RFP Long-term ground lease Tenant build-transfer-manage or build-own-manage (DFW does not build or manage) Development and operational controls in lease documents are critical 7

8 DFW Airport - Business Overview How do you know it s a good deal? Important assurances. Land Use Compatibility Highest and Best Use Off-Site Improvement Costs are Financially Justified Design Quality / DFW Brand Image Proper Maintenance and Upkeep Coordinated Operations Revenue Predictability Good Subtenants 8

9 DFW Land Use Plan

10 DFW Land Use Plan Core Business Operations Map 12,000 acres maintained for our core business of aviation Runways Taxiways Aviation-related uses Cargo development Aviation maintenance facilities 10

11 Commercial Development Coordination Team (CDCT)

12 Commercial Development Coordination Team Development Roles and Responsibilities Member Departments & Contributing Efforts 12

13 Commercial Development Coordination Team Project Flow Chart 13

14 Commercial Development Coordination Team Support and Service Plan of Development (POD) guidelines were created to: Define critical and significant proposal components Convey project magnitude and scope Ensure compliance with respective development criteria Evaluate effect on existing conditions and assumptions 14

15 Planning Department Airport Image Elements

16 Planning Department Land Development Support Airport Image Elements Created and designed for each development area to promote consistency and cohesiveness Incorporates the philosophy, principles and core design for development districts by: Emphasizing Identity Establishing an Image Creating guidelines for a high-quality environment Integrating nature as the dominant theme 16

17 Southgate Plaza Mixed-Use Development

18 Southgate Plaza Mixed-Use Development 18

19 Southgate Plaza Mixed-Use Development Restaurant, Hotel, and Office Pedestrian Friendly Near rental car facility FIDS RFQ 19

20 Southgate Plaza Mixed-Use Development - Objectives Financial Increase Non-Aviation Revenues through Ground Lease and Percentage Rents Tax sharing opportunities Design and Development Distinctive identity and branding to guide future development Optimum pedestrian and vehicular accessibility and convenience Synergy and integration with the existing Consolidated Rental Car Facility Innovative and sustainable LEED quality design principles Dynamic and exciting destination development a new reference in North Texas DFW Priority D/MWBE Values (Disadvantaged/Minority Women Business Enterprise) Serve passengers and non-ticketed companions, employees and commuters 20

21 Southgate Plaza Request for Qualifications (RFQ) Many Developers expressed interest in the approximately 33 acre site adjacent to the Consolidated Rental Car Center An RFQ was drafted, advertised, mailed and available online for the selection of a qualified respondent A Developer s Roundtable Conference was held to address predevelopment discussions and provide a forum for networking and fostering D/MWBE Relationships 21

22 Southgate Plaza Pre-Development Studies Studies conducted by DFW Trade Area Demographic & Psychographic Study Select Service Hotel Market Study Traffic Study Focus Groups Studies Underway Full Service Hotel Impact Study Utility Analysis Airport Operations Impact Analysis DPS Fire Parking Environmental Assessment FAA Airspace Study 22

23 Southgate Plaza PKF Consulting - Hotel Market Study Analyzed the viability room, select service hotel Hotel demand growth averaging 4.6% per year Highest market demand generated from individual business travel 74%, group travel 16% and leisure travel 10% Economic conditions reflect a positive environment for a select service hotel Select service hotel will not have a negative impact on existing airport hotels Airport Surrounded by Limited / Select Service Hotels Construction moratorium in Grapevine for Select Service Hotels Source: PKF Consulting, July

24 Southgate Plaza HVS Feasibility Study for REDICO Full Service Hotel Source: HVS Feasibility Study, June

25 Southgate Plaza StreetSmarts Study - Traffic Impact Analysis (TIA) Map 38 th St. Roadway network modifications and improvements per TIA (Street Smarts) Southgate Plaza Additional left and right turn lanes Modifications to existing traffic control signals Traffic signal phasing improvements S. Service Rental Car Dr. Int l Pkwy exit ramp Shell Station Driveway S. 24th Rental Car Dr. E. Rental Car Dr. Note: TIA identified additional improvements for consideration to further improve the Level Of Service (LOS) Source: StreetSmarts Traffic Impact Study, February

26 Southgate Plaza Design Overview RFQ: Southgate Plaza - Prestigious 33-Acre - Mixed Use Development 1.5 Million Square Feet Phased construction over three years Class A & B Office Space with structured parking (330,200 SF) Full Service Hotel (300+Rooms) Select Service Hotel (130+ Rooms) Retail & Restaurants (69,250 SF) Terminal Shuttle Service (7 Days/24 Hours) Consolidated Car Rental Facility integration via Skywalk 26

27 Southgate Plaza Site Plan 27

28 Southgate Plaza Concept 28

29 Ground Lease Controls Case Study: Southgate Plaza

30 Ground Lease Controls Design and Construction Development Agreement Site Plan Approval Procedure Infrastructure Coordination Process for Dispute Resolution District Development Criteria Coverage, Massing, Parking Acceptable Materials, Forms, Landscape Plaza, Pedestrian Areas, Commons Signage, Advertising, Wayfinding 30

31 Ground Lease Controls Operations Allowable Phasing Cross-Access Provisions Subtenant Approval Process Tenant Requirements Binding Upon Subtenants Trash, Deliveries, Loading, etc. Property Management Standards Mandatory Re-Investment for Long-Term Lease 31

32 Ground Lease Controls Financial Adjustments and Reappraisals for Ground Rent Percent Rent Sales Verification Insurance and Indemnity Requirements Risk Management Creditworthiness of Assignees Subtenant Lease Rights if Tenant Default Property Management if Tenant Default No Mortgage Subordination Tax Responsibility 32

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