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Activity Picks Up On ILM Ground Leases

By Johanna F. Still, posted Sep 6, 2022
Recent ground leases at the Wilmington International Airport will result in ILM more than doubling its ground lease revenue if all anticipated plans are built. (Photo c/o Wilmington International Airport)
In less than a year, Wilmington International Airport has seen a sharp uptick in interest from businesses eager to set up on airport grounds.
 
A flurry of new ground leases has accumulated, with more than 105 acres leased since last year to a variety of air and landside users.
 
“We’ve worked hard as staff just to make sure all these leases move forward,” airport director Jeff Bourk said.
 
The recent ground leases – should each planned development come to fruition as intended – will result in an added $1.8 million in revenue over the next three years, according to airport spokesperson Erin McNally.
 
“We’re pro-development, people can see it, and so they’re coming to us, and one thing happens and it gets in the paper, and then another, so it just keeps building,” Bourk said. 
 
“When an airport starts getting momentum, it oftentimes will continue to get that momentum.”
 
The nearly $2 million in anticipated revenue will more than double the existing $1.75 million generated by current ground leases, according to McNally. With the added boost, ground lease revenues will contribute to a larger share of the airport’s overall operating revenues ($13.1 million in fiscal year 2022), and later be used to offset other airport operating costs.
 
Within the next two to three years, Bourk plans to use the enlarged revenues from the realized ground leases to lower rates airlines pay ILM to operate.
 
“It’s an additional revenue stream that we wouldn’t otherwise have,” Bourk said. “If we’re able to make more on that, then we don’t have to charge quite as much to the airlines, which is also good for the customer, because they can lower rates.”
 
ILM’s rates charged to its four airlines – Delta Air Lines, American Airlines, United Airlines and Avelo Airlines – are about average or a bit above average, Bourk said, “but low is better than average.” The extra cushion from ground lease revenues could also help ILM reinvest funds into its 140-acre business park, which now has just 25 acres remaining.
 
The wave of new activity started in November: CIL Capital and Edgewater Ventures signed on for two separate leases and announced a combined $140 million in investments. Edgewater Ventures is building industrial speculative warehouses and CIL Capital is planning to construct 1 million square feet of combined cold storage space to accommodate the pharmaceutical industry. 
 
Former airport authority chair Donna Girardot, who recently signed on as CIL Capital’s chief strategy officer after her term ended in June, said before ILM’s latest hot streak began last year, it was an “undiscovered jewel.”
 
“We were uniquely positioned,” she said, citing the area’s perks, including the nearby port and rail facilities. “It was going to happen at some time, and it just took somebody to discover us. And it just exploded from then. … I think this will put us on the map.” 
 
In April, ILM netted a hotel – a highly sought-after asset officials had spent years attempting to lure – in ILM Hotel Partners LLC, which is planning a six-story Crowne Plaza. (Later that month, ILM landed its first low-cost carrier, Avelo, which kicked off three routes in June.) 
 
By June, two new land leases had arrived on officials’ desks. ML ILM LLC (Moto Leader Global) aims to construct a warehouse hangar to service specialized auto part imports, and 84 Lumber inked a deal to roughly double its existing footprint. The wholesale lumber supplier nabbed the property next door while it could, according to general manager Brad Wilson. “As we’ve grown, and as this market has grown, we have found ourselves out of room,” he said. 
 
Also in June, a project already in the works came to fruition with the opening of ILM’s second fixed-base operator, Aero Center Wilmington. Director Sandra Spaller, who previously worked for Air Wilmington for 30 years before it rebranded to Modern Aviation, said she sees the airport’s business surge as a microcosm of growth occurring in the region, spurred by the pandemic. 
 
“The region is finally getting recognized,” she said. “I feel like we’ve always needed a hotel at the airport, but I don’t think it would have survived years ago. Now, I think, is the time.” 
 
Last month, Eshelman Ventures LLC, a health care investment firm formed by PPD’s founder, Fred Eshelman, leased airside space to construct a hangar to accommodate private flights. 
 
The rush of business activity has added fuel to ILM’s plans to begin formalizing phase two of its business park, the size and scope of which officials are still exploring. But phase two will consist of a patchwork of dozens of nearby acres the airport already owns. 
 
“The business park growth is such a great opportunity for the airport and the community overall,” Bourk said.
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