Airport Services Facility is Latest Addition to Emerging Aerotropolis at Edmonton Int'l

Paul Nolan
Published in: 

The business world loves a company in growth mode and gets downright giddy when projects bring several growth-oriented companies together. That said, the recently completed multi-tenant complex at Edmonton International (YEG) could be a poster child for concurrent expansion by airport service companies.  

Project: Airport Services Center
Location: Edmonton (AB) Int'l Airport
Facility Size: 50,000 sq. ft.
Cost: $10 million
Owner: Aeroterm
Construction: June 2016-May 2017
General Contractor: PCL Construction
Tenants: Gate Gourmet; Sky Café; Swissport; Airport Terminal Services
Notable Features: Vehicle maintenance pits; wash bays; clear-span warehouse; direct airside access; proximity to passenger terminal

The facility, which opened in May, is the latest phase in an ambitious long-term development plan at YEG, Canada's fifth-busiest airport.

The 50,000-square-foot building comes courtesy of Aeroterm, a private real estate developer that specializes in airport industrial projects. By many standards, it seemed to pop up overnight, with construction starting in spring 2016 and three of four tenants moving in about one year later. 

The major tenant, Gate Gourmet, is scheduled to move in this September, after crews complete final details for its specific operational requirements as the world's largest independent airline catering, hospitality and logistics company. Gate Gourmet will occupy about half of the new facility's total space.  

The tenants already in place are Sky Café, another airline caterer; Swissport International, a ground cargo and handling services company; and Airport Terminal Services, an international company that provides cargo services, fueling and other ground support and a variety of airport terminal functions.

The complex was fully leased before construction was completed. 

Building a Business Hub

The Aeroterm facility is just one component in a diverse and large development project at YEG. Currently, the airport has more than 1.6 million square feet of development underway-a carefully planned mix of cargo and other airport services, retail, hotels, restaurants and entertainment, explains Geoff Herdman, the airport's director of real estate and investment attraction. The strategy behind the "aerotropolis" concept is to build an entire metropolitan community around the airport, which functions as the development's commercial core. The full project will include a premium outlet mall; hotel and restaurant campus; and a horse racing track and casino.

"The airport city model really hasn't taken hold in the U.S., but it has taken hold in Europe and Asia. And it's something we're trying to develop," Herdman says. "The Aeroterm project is an important part of that. It's a real benefit to be partnering with them. For my money, they are the best in the business with this type of development."

Cargo plays an important role in driving airport-centric development, Herdman adds. Last year, cargo volume at YEG grew for the seventh consecutive year. Rosenau Transport took possession of its new 211,000-square-foot facility in September 2016, and YEG also welcomed Flying Fresh Air Freight, a perishables and specialty freight forwarder, to its Cargo Village.

Why Cargo Matters

"Our mission as an airport is to drive regional economic prosperity through aviation and commercial development," says Herdman. "We see cargo as a way to connect our regional market-Edmonton and Northern Alberta-to the world economy and to world markets. It's something that can drive trade and make our region more prosperous in the process." 

Cargo revenue is also crucial for YEG, which operates as a not-for-profit corporation that is fully self-funded. "In Canada, we do not get government funding," explains Herdman. "We also do not get to tax people."

In 2014, YEG's economic impact on the city of Edmonton and Leduc County was valued at $2.2 billion. In June, the airport, county and cities of Edmonton and Leduc signed an inter-jurisdiction cooperation accord. "This partnership provides an unprecedented collaborative opportunity to innovate and advance the region and YEG as a competitive global investment destination," said Edmonton Mayor Don Iveson in a press release.  

Herdman emphasizes that passenger transactions aren't the only commerce taking place when flights take off or land at YEG. "The belly of the plane isn't just full of luggage, it's full of cargo, too," he says. 

As a specific example, abundant cargo shipments make direct service from YEG to Amsterdam viable for the Dutch airline KLM. On a broader level, the airport's cargo capabilities support its efforts to attract new carriers and routes. "We've got an airport that's a good size, but relative to the big North American players, we have to work harder to attract those flights," says Herdman. "Having good cargo volumes really helps with that."

YEG's Cargo Village sits on 160 acres, and about 60% of that land is still available for development, notes Herdman.  

A Win-Win-Win 

Erin Gruver, Aeroterm's chief development officer, wants his firm to be YEG's go-to provider for facilities leased by support service companies. The complex it built for Gate Gourmet, etc. is Aeroterm's third project at the airport. It also owns the FedEx facility and WestJet cargo hangar. 

The company has plans to build a fourth facility at YEG, but Gruver could not provide further details due to confidentiality agreements with prospective tenants. 

The ground lease agreement for its recently completed facility runs until 2072. Individual lease terms with Gate Gourmet and the building's other tenants average 10 years. 

During the design stage, Aeroterm worked closely with YEG officials and tenant representatives to make sure that facilities fulfilled everyone's specific expectations, notes Gruver. Space for Swissport, for instance, includes work pits to facilitate maintenance of ground support vehicles. Warehouse areas were designed without support columns so forklifts can maneuver easily.

Carole Pitre, general manager of Airport Terminal Services' YEG station, says her mechanics are excited to have a new facility with improved ventilation, reinforced concrete floors for heavy machinery and other workplace upgrades.

"We look at every detail with the tenant to ensure that the space meets their needs when the building is done," says Gruver. "We're trying for win-win-wins by creating solutions where Aeroterm can provide funding and development of new airport assets to improve not only the airport itself, but the operational performance of airport users. Tenants get new space with competitive lease rates, and that space enhances their ability to be efficient. The airport authority gets revitalization of areas that were not being used optimally, and we grow our relationships with airports and the tenants."

The airport helps market leased space throughout its campus to international companies by emphasizing its position on transpacific and transpolar air routes. It is also located on the CANAMEX corridor, which facilitates highway transport from Alaska to Mexico. In addition, the airport helps tenants secure Foreign Trade Zone benefits. 

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