Barbara Champoux, Champoux Law Group
In a prior “Desperately Seeking Infrastructure” Series article (https://cre.nyrej.com/seeking-infrastructure-aerotropolis), the integral role aerotropolises can play in determining 21st century urbanization and globalization success, impacting development, land use and economic growth in major global cities and surrounding metropolitan regions was discussed. Nevertheless, they have not yet taken off despite compelling reasons to do so, due to the challenges associated therewith. Effective solutions to the challenges they present must be developed, given the tremendous economic and social benefits to be derived.
Challenges include:
• Historic mismanagement of most aerotropolis development, which has been spontaneous and haphazard - often spawning congestion and environmental problems.
• Structuring the appropriate governance mechanisms and determining relative stakeholder control, given the complex relationship between public and private stakeholders, and emerging financing vehicles.
• Competition – similar to global financial centers jostling for position in the new international financial order, aerotropolises compete for market dominance: Everyone wants to be the hub; no one wants to be the spokes.
• Growing concern about heavy debt burdens amassed by many municipalities to construct airports, particularly where significant central government subsidies are not available.
• Fears that an airport construction “bubble” is being created through over investment in airports which are simply not needed.
• Human factors, such as: fear of plane crashes and extreme noise in immediate vicinity; environmental concerns; attachment to a place; political maneuvering; and the persistence of non-aeronautic networks.
Yet, the potential benefits to be derived from successful aerotropolises provide enormous incentive for creating solutions to those challenges. For instance:
• The Dulles airport region in Washington, DC, represents the second largest retail market in the U.S. (just behind Manhattan). Hong Kong International Airport, Seoul’s Incheon and Memphis International are leading air cargo and logistics centers, with the first two airports sustaining, respectively, Hong Kong Disneyland and New Songdo International Business District.
• Corporate headquarters are gravitating to airport areas, with MIT research showing that over half of the Fortune 500 headquarters are located within 10 miles of U.S. airport hubs - compared to 29% of all U.S. business establishments.
• Disrupting local monopolies, thereby expanding local access to services and customers, resulting in more competitive pricing. For instance, it allows Indian hospitals to entice American heart patients for top-notch surgery at rock-bottom prices.
Furthermore, cities are extremely congested, largely driven by jobs, creating an intense burden on city housing and infrastructure, which must be effectively addressed. More than 50% of humanity currently lives in cities (higher in developed countries), and is expected to nearly double within 40 years to over 6B people. The size of cities’ footprints is expected to increase twice as fast as a result of the influx. Yet, the infrastructure serving those cities is dangerously inadequate, and the dearth of affordable housing is increasingly problematic.
A strategically developed aerotropolis can alleviate the burden on cities, while expanding market access and providing much needed jobs. So, resolving the problems currently associated with aerotropolises is not only potentially lucrative, but crucial for city livability, as will be discussed in the next series article.
Barbara Champoux, Esq., is a board member and past president of the CREW New York Network, New York, N.Y.