Airport retail has been a growing sector since 2001. Because of heightened security, travelers have to show up at the airport earlier and have more time to peruse in-terminal retail options. That success is now inspiring developers at Dallas/Fort Worth International and Denver International to think big--big box, that is.

In what would be the first project of its kind in the U.S., Dallas/Fort Worth International is in the planning stages for a 600-acre mixed-use development that would include up to 800,000-square-feet of retail space.

And Denver International has already awarded a development contract for a 17-acre site to build a mixed-use complex that might eventually grow by an additional 500 acres.

The projects, which would include major big-box category killers, are a way for airport operators to generate revenue at a time when they can’t squeeze more fees from the struggling U.S. airline industry. “They are looking to not be so dependent on what airlines can pay,” says Bruce F. Katz, founder and president of San Francisco-based consulting firm Retail Focus. The new projects, he says, are just the most ambitious extension of a move to develop non-airline revenue that has been under way for 15 years.

It’s not just about snagging a few more bucks from travelers with time to kill. At both Dallas/Fort Worth and Denver, demand is expected to come from nearby residents and airport employees. Denver International employs about 30,000 workers, while Dallas has approximately 57,000.

“The employees are there, they work long hours and it would be convenient for them to leave [without having to deal with a lot of security procedures],” says Karen Bellantoni, senior vice president with New York-based Robert K. Futterman & Associates.

In the case of Dallas/Fort Worth, the airport is attempting to develop a vacant property on its southern tip tentatively called Passport Park. The project would devote 125 acres of land to retail. The airport’s management is hoping to bring in stores like Target, Wal-Mart and PetSmart.

Dallas/Fort Worth officials have already met with several developers to discuss the project and are also considering building the complex in a joint venture partnership that would allow the airport to share in ownership revenues. The airport’s board of directors has not yet granted approval on the development, but Marcus Phillips, an officer with Redwood Real Estate Partners LLC and one of the people involved in the Denver International project, believes that large-scale retail complexes at airports will eventually become the norm.

“I think airports are becoming the center of commerce and that’s definitely a wave that’s happening,” he says. “The term aeropolitan accurately reflects what’s going on. Airports are beginning to be city centers.”

Redwood and its partner Denver-based CMCB Development Co. have been chosen by Denver International to develop the 17-acre land parcel north of Pena Boulevard and about a mile away from the airport’s main terminal. The Pena Project will initially be much smaller than the Dallas/Fort Worth development–it will include approximately 60,000-square-feet of inline retail, a hotel and possible office space–but the airport might eventually expand it to encompass 500 acres along Pena Boulevard that it has already identified for future commercial uses.

“DIA owns a large amount of ground and their mission is to consistently drive non-airline revenues upward, so they are absolutely planning to evaluate the retail and commercial aspects of the airport,” Phillips says.

The challenge for Dallas/Fort Worth is that there might not be enough residents close to the southern tip of the airport right now to create a large enough market for big box stores. Company executives have said that the Passport Park development won’t come on line for another two to three years, possibly giving them time to come up with a mixed-use strategy that would create the necessary retail demand.

“If they have 600 acres, they must create some housing there – that would help them a lot,” Katz says. “If there are not a lot of residents [at the moment], they might develop this property in phases to get [the demand] going.”

Katz believes that as long as the market fundamentals are strong, big box tenants at airports would make as much sense as any other kind.
“If there is enough population and the store deployment is such that another location is supportable, there is no problem putting anyone in,” he says.

-- Elaine Misonzhnik