Developing and attracting businesses to several hundred acres on Jackson Municipal Airport Authority land east of Medgar Wiley Evers International may be the Authority’s best hope for offsetting the $800,000 lost annually to the departure of Southwest Airlines.
The revenue loss has already cost the Airport Authority a Fitch Ratings Service downgrade of a $39.4 million bond issue, forcing a delay in improvements planned for the terminal and security checkpoints. Further, the Authority has put a series of fee hikes on remaining carriers and hit visitors with increased parking fees.
Nearly two-thirds of the Authority’s annual operating revenues of $17.6 million come from non-airline sources. Of the $17.6 million, parking revenue accounts for $6.1 million, according to Fitch.
The aim is to achieve a sufficient combination of fee increases and operational belt tightening to convince Fitch to restore the A- rating, soon-to-retire Authority CEO Dirk Vanderleest said in recent interviews.
In designating the bonds BBB+, Fitch noted it still sees them as investment grade.
The executive who replaces Vanderleest will inherit 900 undeveloped acres the Authority owns east of the airport — an asset known as the East Corridor Project. It offers the prospect of a greatly enhanced revenue picture. But it comes with plenty of challenges.
The five-member Airport Authority board spent a week in early July at the Farnborough Air Show in London, a trade showcase that attracts aviation businesses from around the world. The idea was to put the airport on the radar of the companies gathered there, especially those on the supplier side of the business.
But can the Airport Authority realistically pitch the property to suppliers who rank transportation as a key priority?
A trio of circumstances makes that a long shot, say commercial real estate professionals and executives of a pair of companies that develop airport cargo and other industrial complexes at airports around the country.
Geography — specifically Jackson’s proximity to such major transport hubs as Atlanta, New Orleans, Memphis and Dallas — diminishes it appeal for warehouse distribution, they say.
Further, the abundance of privately owned land near Jackson Medgar Wiley Evers International Airport erodes the value of those 900 acres owned by the Authority, commercial real estate professionals say.
The trifecta’s final barrier: The perception, at least locally, that real estate professionals and developers have received only limited accommodation from the autonomous Airport Authority and the members appointed over the years by various Jackson mayors.
One high level executive of an industrial development company said the single time in his long career he has been screamed at during a presentation occurred at a briefing he gave the Airport Authority a decade ago.
Some commercial brokers removed the airport and its property from consideration a long time ago. “It’s been a screwed up mess,” said Walter Becker, who founded Jackson’s Commercial Real Estate Services firm in 1985.
“They’ve never done anything,” Becker said, referring to the 900 acres.
He said he won’t take a client out to discuss a lease or purchase on Airport Authority-owned land. “Those who make a living on commissions have to spend their time wisely,” Becker said.
It’s unclear who has the job of developing the East Corridor property and seeing that infrastructure is eventually provided. Authority CEO Vanderleest, COO Bonnie Wilson and Communications/Marketing Director Gene Moore referred all questions about the East Corridor development to Flowood Mayor Gary Rhoads, chair of the East Metro Corridor Commission, a body made up of Rhoads, Pearl Mayor Brad Rogers, Brandon Mayor Butch Lee and Vanderleest, as the representative for the Airport Authority.
Rhoads said in an interview with the MBJ that development of the tract is out of the East Metro Corridor Commission’s purview. Its job, he said, is to get a roadway built from Flowood through airport property to Old Brandon Road, a project he says will be completed soon.
Getting the East Corridor ready as a business park would probably be a task for the Airport Authority, Rhoads said, though he noted as mayor of Flowood, he would work to extend utilities into the property if a prospective buyer for property within the East Corridor tract wanted it.
Rhoads said he stays out of Airport Authority business. “I’ve never been to one of their meetings,” he said.
Vanderleest, he said, once showed him a master plan for developing the corridor. “It was done by the airport a couple of years ago,” Rhoads said.
Asked about a master plan, COO Wilson said she could not confirm there is one.
If a plan for developing the property and devising a strategy for bringing businesses into it have been completed, the Central Mississippi Planning & Development District has not participated, said Mike Monk, CMPD’s director of community and economic development.
The planning agency helps cities and other entities in the region to develop land-use plans and prepare grant applications for economic development infrastructure. “We have not been involved in any work for them for quite some time,” said Monk, recalling the last joint effort with the Airport Authority involved preparing a grant request for a construction of a logistics center to house a United Parcel Service operation.
He said he expects “they will eventually reach out to us on some plans” for getting roads and utilities into the East Corridor tract.
Likewise, the Mississippi Development Authority says it can help prospects get settled on airport property. “If a company looking at a site on airport-owned land, and it meets its particular needs, then MDA will work with our local economic development partners to assist the company as it prepares to locate there — just like the agency does any time a company selects a location in Mississippi,” spokeswoman Tammy Craft said.
The Mississippi Air Cargo Logistics Center, a 41,000 square-foot complex, is among the most notable economic development achievements of the 50-year-old airport. Along with a designation as a federal Free Trade Zone and provider of federal inspections services, the fully-leased complex is a distribution point for air cargo, truck and rail shipments generated by manufacturers and consumers in most major Midwest and eastern U.S. and Canadian markets, says Aviation Facilities Co., a Dulles, Va.-based aviation-warehouse development company that received a ground lease on which to build the center 10 years ago.
In all, the airport has around 75,000 square feet of cargo warehouse space and an additional 450,000 square feet of aircraft parking space.
While Aviation Facilities Co. is pleased the center is fully leased with such tenants as UPS, Integrated Airline Services and freight forwarders Page and Jones, the development company is unlikely to add to its presence at the airport, said John Garrott, company director.
“The airport would love us to develop another air cargo building but there is no demand for it,” he said.
Garrott agreed with Metro Jackson commercial real estate brokers who say the region’s proximity to major distribution hubs damages the airport property’s warehouse distribution prospects. “I think there is some truth in their observations,” he said.
Add the option of buying land instead of taking on a ground lease to the reasons site selectors may bypass the airport property, said David Hoster, CEO of Jackson’s EastGroup Properties, a real estate investment trust that specializes in warehouse and industrial development and leasing in the South and West.
“You can’t pledge it to the bank as collateral,” Hoster said of ground leases.
What’s more, plenty of privately owned land west of Airport Road leading to Lakeland Drive can be bought inexpensively, he noted, and added that with infrastructure already in place, it can be developed more easily than the airport tract.
He said he can see “nothing that the airport is doing that is going to create a reason for anybody to be out there.”