Hear the word ‘airport’ and certain things spring to mind: planes, holidays, business trips, duty free, tourists – all framed by somewhere that, more often than not, people travel through, not to.
With 250 million passengers using UK airports in 2015, it is an easy association to make, but with a significant proportion of airport turnover generated by commercial activity in the B2B sector, airports are home to a thriving network of diverse operations, all benefiting from the unique location they are in.
Predominantly, this activity is dominated by freight, with airports providing those associated with the movement and logistics of goods the ability to successfully and quickly transport large quantities of cargo across the globe; all delivered in an environment designed to enable their safe and efficient flight. This specialised infrastructure means UK airports now handle more than 2.5 million tonnes of freight every year.
For those involved with aviation, the upsides are obvious. But it is not just access to airside facilities that make airports useful places to operate. Increasingly, they are commercial destinations where people choose to do business. For them, locating at an airport, with all its associated benefits, brings advantages to numerous aspects of their commercial operations.
In 2015, the country’s leading airport group, Manchester Airports Group (MAG), served more than 50 million passengers across its four airports: London Stansted, Manchester, East Midlands and Bournemouth. Unsurprisingly, just over 50% of the £738m annual revenue in financial year 2014-15 derived from aviation activity. However, the remaining share was generated from associated airport activities such as car parking, retail, business lounges and, perhaps most interestingly, commercial property, which generated £46.4m in turnover alone.
Anchors of 21st-century development
Considering their constituent parts, it is clear why airports offer a competitive edge. To be successful, airports must create connections between people, places and the businesses that locate there. Here, companies enjoy inherent transport advantages as standard; they also offer a combination of benefits unavailable in a city centre, business park or industrial estate. Airports are self-contained, compact and easy to access and move around; they are open 24/7 and provide a security infrastructure unavailable in any other business location.
For major UK operations such as Manchester, Stansted, Heathrow and Gatwick, they also provide a level of convenience and amenity more commonly associated with a city-centre location, where shops and services to suit a range of tastes and budgets are easily accessed on foot, often sheltered from the weather. Ted Baker, Hugo Boss, Superdry, WHSmith, Starbucks, Boots, Caffè Nero, Giraffe and Leon are all high-street brands that can be found at MAG airports.
Taking these combined benefits further, the idea of a multimodal destination that supports and develops a meaningful commercial environment gave rise to Dr John Kasarda’s ‘Aerotropolis’ concept: a metropolitan subregion where layout, infrastructure and economy centre on an airport serving as the commercial core.
No longer conceptual, the rapid expansion of airport-linked commercial facilities is making today’s air gateways anchors of 21st-century metropolitan development, where distant travellers and locals conduct business, exchange knowledge, shop, eat, sleep and are entertained without travelling more than 15 minutes from the airport hub. This operational and spatial evolution has already transformed many leading international airports into functioning airport cities, from Schiphol and Dubai to Munich and Songdo.
A premium property product
As chief executive officer of MAG Property, the property and development business of MAG, I understand that all airports are different and, through masterplanning each of our locations, we have the opportunity to successfully deliver variations on the Aerotropolis concept. With an airport property portfolio comprising almost 6m sq ft, we provide high-quality offices, terminals, hangars, warehouses and hotels; and the fact we both own and manage them makes us relatively unique in our marketplace.
While a number of leading property companies and investment funds across the industrial sector successfully own and manage property at UK airports, such as SEGRO, Peel, AIPUT and many more, none operate solely within the airport sector or are derived from a dedicated airport operator. Across MAG’s UK airport network, businesses can reach more than 75% of the UK’s population within two hours’ drive.
The combination of connectivity, convenience and expertise means the specialised product on offer commands a premium. Strong rental levels and high occupancy rates are testament to this, with a diverse range of occupiers from banking and construction to aviation and logistics taking advantage of the benefits on offer. Consequently, at MAG Property, we are proud to have built lasting partnerships with international companies across the industry spectrum, including DHL, dnata, Etihad, SCA, Handelsbanken, Radisson Blu, Regus, BCEGI and AIM, many of which have grown within our portfolio.
Opportunities for development
With the Aerotropolis concept in mind, airports traditionally come with large areas of land and it is here where significant opportunities exist, where land can be earmarked for development, ready to unlock when the time is right. Similarly, MAG Property’s long-term commercial strategy means 1,000 of the 6,000 acres of land across our portfolio is available to develop; this means we can offer new-build product across our locations, each of which reflects the strengths of the individual airport, market conditions and regional economy.
Now, London Stansted is home to a range of new-build opportunities that help support the continued growth of the London-Stansted-Cambridge corridor and the growing life-sciences cluster around Cambridge. On the south coast, Bournemouth airport’s Aviation Business Park is developing into a specialist aerospace and manufacturing cluster, as well as playing a crucial part in Dorset LEP’s £40m Bournemouth International Growth programme.
East Midlands airport’s central location, and its proximity to Derby, Nottingham and Leicester, makes it a critical driver of economic growth across the region. More than 50 acres of development land here is designated for cargo, logistics and transit property development, complemented by an established office business park and hotel portfolio – all designed to capitalise on its geographic position and its role as the UK’s largest airport for pure freight.
Perhaps most significant is MAG’s 50% equity investment in Airport City Manchester. A strategically important part of the ‘northern powerhouse’, this £800m development adjacent to Manchester airport comprises 5m sq ft of offices, hotels, logistics and advanced manufacturing facilities and is being delivered by a joint-venture partnership between MAG, Beijing Construction Engineering Group, Carillion and Greater Manchester Pension Fund, with Argent as development manager.
The significance of Airport City Manchester cannot be underestimated and was reinforced by Chinese president Xi Jinping’s recent visit and endorsement of the scheme as an ideal place for Chinese investment within the UK. The president also announced the creation of Shenzhen Gardens and Wuhan Square, a 484,000 sq ft international cluster offering investors and occupiers a range of modular and traditional workspace, complemented by a personal concierge service and direct flights to Beijing from Manchester Airport.
Furthermore, recent news of Amazon’s 654,000 sq ft warehouse at Airport City Global Logistics, which will support 1,500 jobs, reaffirms the scheme’s international appeal as a credible destination with the size, connections and benefits to attract massive global players, as well as allowing Amazon to efficiently co-locate with airport supply chain partners such as DHL and FedEx.
Supporting future global economic growth
Historically, for businesses unrelated to aviation that are looking to relocate, the word ‘airport’ was not commonly found in the traditional tick list of locations. City centres, business parks and industrial estates are well established in the property vernacular and for good reason. But in the 21st century, our experience as airport property experts tells us that international airports, which are crucial to economic growth across the world, must now be on the list.
The rise of air travel, mobile working and global business networks means businesses from many sectors now require a property infrastructure to support this progress. As Kasarda predicted, international airports have the ability to fulfil these needs by providing credible places to locate, characterised by a level of connectivity unavailable elsewhere.
So, the next time you are at an international airport, suitcase in hand, take a moment to imagine working there; a destination you and your business can travel to, not just through.
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