May Build T Hangars at Small Airport

A

Airplane#4904

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Airplane#4904
Our small municipal airport only has 12 T hangars. There stays a waiting list as long as 1-2 years. It is city owned. The city has thrown the idea of additional hangars around for some time but always delays it or denies it due to funding. I'm considering approaching the City and seeing of it's within the realm of possibility to obtain lease for the land, and building the T hangars and renting them out myself. I feel like there's demand enough to see a return on my investment within a reasonable amount of time. We are a small rural airfield but I constantly hear of people from the busier airfields 45-90 minutes drive away looking for space.

Me landing this deal is a long shot but I'm sure someone here has built hangars and leased them out and I'd love to hear how you went about it. Are there any aviation specific codes or regulations in addition to normal local commercial building codes? What was your biggest expense besides initial construction? Any advice?

Thanks for any input.
 
Only thing I know is fire suppression requirements have changed since most were built… Look carefully into that.

Might change configuration is all I foresee with that possible snag. I think it’s a great idea.
 
I would encourage you to talk to your local building official early to determine what codes they will be using.

We recently built a set of 10 at-hangars for $1.5M on an already shovel ready site. 43 foot wide, I believe 12-14 foot height clearance, from Erect-A-Tube. We did have to install a rated firewall in the center to break the building in two for fire code and to avoid the need to sprinkle the building.

Do the math, and see what you would need to charge to recoup your investment, plus cover your land lease and maintenance costs. I have a feeling the answer will surprise you, and is the reason you don't really see private investment in T-hangars.
 
Good call, I didn't think of that. I don't believe the current T hangars at the field have sprinklers or anything.
 
This is entirely something within the realm of possibility, but make sure you accurately calculate your return on investment. Typically it doesn’t pencil out as well as many think it does, hence why it isn’t commonly done. The less land development needed, the better.

You’d need to enter a ground lease agreement with the City, hopefully with terms long enough to allow your investment to be realized.
 
The idea is great, good for the city (more traffic & gas sales) ; for the owners who want hangars; for you.

Possible stumbling blocks: our leases prevent subleasing (much as I disagree, there it is)
Would the owners rent from you and you have a lease with the airport? (if so, would the onus would be on you, the hangar owner, to ensure aircraft owners remained in compliance with all the usual airport - tenant lease conditions?)
I'm not sure the airport would want to hand over control of so much of the airport to an outside party as described. I believe there are FAA stipulations (assuming this airport gets federal grants) that require the airport to 'exert control (and maybe ownership) of all improvements on the airport'.
I have also heard folks say airports don't want one owner to own a large share of available hangars, to prevent a monopoly situation where the landlord can then prey on renters (that however, assumes subleasing is even possible).

Hope you can work through this, it sounds like a great idea.
 
midwestpa24 said:
recoup your investment, plus cover your land lease and maintenance costs. I have a feeling the answer will surprise you, and is the reason you don't really see private investment in T-hangars.
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would you also need insurance or could you trust that the lessees would have their own and you could never be named in a claim?
 
midwestpa24 said:
I would encourage you to talk to your local building official early to determine what codes they will be using.

We recently built a set of 10 at-hangars for $1.5M on an already shovel ready site. 43 foot wide, I believe 12-14 foot height clearance, from Erect-A-Tube. We did have to install a rated firewall in the center to break the building in two for fire code and to avoid the need to sprinkle the building.

Do the math, and see what you would need to charge to recoup your investment, plus cover your land lease and maintenance costs. I have a feeling the answer will surprise you, and is the reason you don't really see private investment in T-hangars.
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Thank you. I assume you did the asphalt taxiways up to the hangars? Did you contract someone to build or do you do your own construction?
 
Let'sgoflying! said:
would you also need insurance or could you trust that the lessees would have their own and you could never be named in a claim?
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Insurance is on my list of gotta have. I've reached out to some agencies and prices vary from $800 to $5000 a year. The more solid plans I have I'm sure that price gap will close.
 
Let'sgoflying! said:
would you also need insurance or could you trust that the lessees would have their own and you could never be named in a claim?
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Depends how the lease is written. I’d want to require it.
Airplane#4904 said:
Thank you. I assume you did the asphalt taxiways up to the hangars? Did you contract someone to build or do you do your own construction?
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Government sponsored construction has to undergo a bid process. Private development would not and could be sourced through someone of your choice, typically. It’s still wise to have the Airport’s engineer consultant review plans.
 
RyanB said:
Depends how the lease is written. I’d want to require it.

Government sponsored construction has to undergo a bid process. Private development would not and could be sourced through someone of your choice, typically. It’s still wise to have the Airport’s engineer consultant review plans.
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Very true, that's the main hurdle I'm concerned about.
 
Airplane#4904 said:
Thank you. I assume you did the asphalt taxiways up to the hangars? Did you contract someone to build or do you do your own construction?
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We are the airport, so we had to follow public process and bid the project. Being government does increase the cost

The $1.5 million did not include the taxiways and utilities, those were done previously to create a shovel ready site for the building and were additional costs. The only reason we as the airport make the math work is because the project was funded through grants, so return on investment does not have to be guaranteed.

Just for easy math, $1.5M translates to $150,000 per unit. Assume a 15 year business loan, $10,000 per year, 12 months means $833 per month for rent. That is no interest, no utilities, no maintenance, no insurance, etc.

Outside of major metro areas, how many people are paying $800+ per month for a T-Hangar? If we charged that here, we would be accused of being anti aviation and run out of town with pitchforks and torches.
 
Let'sgoflying! said:
would you also need insurance or could you trust that the lessees would have their own and you could never be named in a claim?
Click to expand...

You would want, and probably need insurance. If you are borrowing the money you would be required too.

Another data point, property insurance for airports is going through the roof. Ours has tripled in the last year, yes 3x what it was. Many underwriters have left the market, which didn't have many to begin with. I'm told too many tornadoes hitting airports and resulting in multi-million dollar losses.
 
midwestpa24 said:
You would want, and probably need insurance. If you are borrowing the money you would be required too.

Another data point, property insurance for airports is going through the roof. Ours has tripled in the last year, yes 3x what it was. Many underwriters have left the market, which didn't have many to begin with. I'm told too many tornadoes hitting airports and resulting in multi-million dollar losses
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Tripled? Dang!
 
midwestpa24 said:
We are the airport, so we had to follow public process and bid the project. Being government does increase the cost

The $1.5 million did not include the taxiways and utilities, those were done previously to create a shovel ready site for the building and were additional costs. The only reason we as the airport make the math work is because the project was funded through grants, so return on investment does not have to be guaranteed.

Just for easy math, $1.5M translates to $150,000 per unit. Assume a 15 year business loan, $10,000 per year, 12 months means $833 per month for rent. That is no interest, no utilities, no maintenance, no insurance, etc.

Outside of major metro areas, how many people are paying $800+ per month for a T-Hangar? If we charged that here, we would be accused of being anti aviation and run out of town with pitchforks and torches.
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I know many places where $800/mo hangar rent would be welcome with open arms…

I’m thinking of places where the FBO wants $1200/mo to park…. Outside.
 
Construction costs have gone through the roof. Generally I believe the city county who owns the airport gives you a long term land lease and at the end of the lease the hangers then belong to them.
 
bonefishpete said:
Construction costs have gone through the roof. Generally I believe the city county who owns the airport gives you a long term land lease and at the end of the lease the hangers then belong to them.
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You are correct, but you should also get first right to refusal on renewal.
 
What is the critical mass on the number of T Hangars? That is, it cost $X just to put one in, but because of shared walls and what not, the cost for building each additional one is cheaper than the one before it, and the average cost goes down. At some point the curve flattens completely and it's then just a matter of building the number of units that the market will support.

What about building a covered tie down vs traditional hangars? Reduce the building cost, maybe the insurance costs, less codes to deal with.

Here is ATL land, a hangar would be nice, but they are impossible to get. A covered T would give me 75% of what I need (protection from hail, keep sun from cooking the plane, etc.). I could see putting a truck bed sized locked tool box in the area to keep some supplies in. Assuming I could also get an electrical outlet, I'd pay you $400 a month for that. Did I mention I'm in ATL area LOL.
 
WDD said:
What about building a covered tie down vs traditional hangars? Reduce the building cost, maybe the insurance costs, less codes to deal with.
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I've often wondered why covered tie-downs aren't more popular. It's amazing how much worry can be eliminated by throwing up a relatively inexpensive piece of corrugated aluminum over the plane as a roof. Then just throw a dock box next to it with some storage and you're half way to the value of a hangar.
 
ArrowFlyer86 said:
I've often wondered why covered tie-downs aren't more popular. It's amazing how much worry can be eliminated by throwing up a relatively inexpensive piece of corrugated aluminum over the plane as a roof. Then just throw a dock box next to it with some storage and you're half way to the value of a hangar.
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Add power to it and it is a pretty nice setup. The reason you probably don’t see that many is everyone can see the open hanger spots where the plane is out for maintenance for 3 month or gone north or south for the season and complains that they can’t get a hanger spot when 1/2 the hanger spots don’t have an airplane in them. Plus people don’t want to pay as much for a shade hanger as they do for an enclosed hanger where they can store all their aircraft stuff and work on the airplane. In some privacy.

Brian
 
If you’re doing this for the purpose of hangaring an airplane, then it’s just a cost of flying. If you’re doing this for a way to get rich, it won’t work unless you’re in an area with extremely expensive hangar fees, and even then the rate of return will match the pace of a snail, that is if it is even a positive number.

Have you done the calculations?
 
I’d suggest you see if you can get the land instead of just leasing it.

At our local, the municipal hangars are expensive to rent and you have no real rights. However, there is a set of private hangars which are built on land which you own if you buy the hangar. It’s all inside the existing airport fenced area when it was put up. I have no idea how the developer managed that but it made those hangars attractive for long term investment. As the airport is in the middle of a growing suburb, and if that airport goes the way of a dodo you should get some value out of the plot of land they have to have to develop new housing.
 
SebIp said:
I’d suggest you see if you can get the land instead of just leasing it.

At our local, the municipal hangars are expensive to rent and you have no real rights. However, there is a set of private hangars which are built on land which you own if you buy the hangar. It’s all inside the existing airport fenced area when it was put up. I have no idea how the developer managed that but it made those hangars attractive for long term investment. As the airport is in the middle of a growing suburb, and if that airport goes the way of a dodo you should get some value out of the plot of land they have to have to develop new housing.
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Depends on the airport, but if its a public owned airport that receives Federal funding, not going to happen.
 
We've had people try, but too many hurdles.

The city wants to know that when your lease expires and they take ownership of the hangars, that they meet their standards.
- doors must be electric
- you pay for paved taxiways. With new FAA rules, you can't go directly from a ramp to a runway, so it costs more.
- if you build on the other side of the airport you must provide a restroom. (currently there is nothing on that side)
- you must provide security lights.
- your tenants have to have insurance
- you get a 20 year lease and at the end of that lease, the city can renew your lease, you can take down you hangars, or they become property of the city. No guarantees they will extend the lease.

By the time the discussions were over, the builder said he would have to charge $800/month for a hangar, but thought that people would pay that. We have a shortage of hangars in the area, so he's probably right. I pay $460/month now. My fear is the city will see him get $800 and raise our rates!

Our 12 t-hangars cost $1M to build about 4 years ago and that didn't include the taxiway, fire suppression, etc. So $460 * 12 = $5,520/mo or $66,240/yr. So 15 years to pay it off not considering interest and the city likes to give 20 year leases. The math just doesn't work.
 
midwestpa24 said:
I would encourage you to talk to your local building official early to determine what codes they will be using.

We recently built a set of 10 at-hangars for $1.5M on an already shovel ready site. 43 foot wide, I believe 12-14 foot height clearance, from Erect-A-Tube. We did have to install a rated firewall in the center to break the building in two for fire code and to avoid the need to sprinkle the building.

Do the math, and see what you would need to charge to recoup your investment, plus cover your land lease and maintenance costs. I have a feeling the answer will surprise you, and is the reason you don't really see private investment in T-hangars.
Click to expand...
How much of that was labor and how much was materials? Insulated? That seems to be an insane amount of money for what is sheet metal with motoroized(?) doors.
 
masloki said:
How much of that was labor and how much was materials? Insulated? That seems to be an insane amount of money for what is sheet metal with motoroized(?) doors.
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Erect-A-Tube is what we have and it was $1M. I bet the foundation they poured was 10' deep. They're the brand name that airport managers know.
 
masloki said:
How much of that was labor and how much was materials? Insulated? That seems to be an insane amount of money for what is sheet metal with motoroized(?) doors.
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Footings, floors, building and labor, don't have a break down of costs because it was lump sum bid. Not insulated, not heated. Steel structure, sheet metal, basic lighting and motorized bi-fold doors. I agree it seems steep, but it is the going rate.
 
I'll chime in as well, tried to do it in TX when I lived there in 2019, 12 T-hangars, Erect a tube, with motorized doors, no insulation, but included foundation but not the taxiway. Total estimate $1.1 Mil. So I'm assuming more now. So it worked out I would have to charge $850 to $900 to make anything over the 25 year life span. Going rate for T-hangars at that airport $350 per month. So the math just does not work, its understandable why no one is actually building T-Hangars outside of a HCOL area where they can get $1000 per T-hangar.
 
ArrowFlyer86 said:
I've often wondered why covered tie-downs aren't more popular. It's amazing how much worry can be eliminated by throwing up a relatively inexpensive piece of corrugated aluminum over the plane as a roof. Then just throw a dock box next to it with some storage and you're half way to the value of a hangar.
Click to expand...
I can’t imagine that covered tie downs would save a lot of money vs basic t-hangars, but maybe we’re imagining something different with regard to the t-hangars.
 
MauleSkinner said:
I can’t imagine that covered tie downs would save a lot of money vs basic t-hangars, but maybe we’re imagining something different with regard to the t-hangars.
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Something like a sunshade? 5c1 put up a dozen or so of these fairly inexpensively, but the hardball had already been laid a long time ago. Essentially it was drill some post holes then add canopy and tie down rings.

53eb815dba30d1e79609f9b39457e897.jpg
 
My airplane partner has been putting in some thoughts of building a new hangar. We have 4 acres at the airport with 2 hangars there already. Plenty of room to build out another one. We have been discussing an 80x60 hangar. Acting as our own contractors we are in the ballpark of $700K. The airport will extend out our land lease for 30 years but we need to recapture that money before that.

Using a 5% return, we would need to get around $810,000 back for it to make sense. If we set that at a 15 year return that's $54,000 per year or $4500 per month without CPI. Our current hangar makes about $2200 per month so it's a hard press to even build on a larger scale.
 
I'm genuinely curious as to the breakdown of costs. From my uneducated perspective, $700k for a glorified metal box with an oversized garage door, some concrete, and some asphalt doesn't seem like it should be anywhere close to that much in terms of time, labor, and materials, especially if you are acting as your own contractors. Is the bulk of the cost the materials, the labor, the required ancillary stuff (drainage, fire suppression, electrical), or something else? Seems odd that you can outright buy land and build a house for less than the cost of a that hangar.
 
AvNavCom said:
I'm genuinely curious as to the breakdown of costs. From my uneducated perspective, $700k for a glorified metal box with an oversized garage door, some concrete, and some asphalt doesn't seem like it should be anywhere close to that much in terms of time, labor, and materials, especially if you are acting as your own contractors. Is the bulk of the cost the materials, the labor, the required ancillary stuff (drainage, fire suppression, electrical), or something else? Seems odd that you can outright buy land and build a house for less than the cost of a that hangar.
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Have you looked into the cost of building a house these days? We are getting ready to this year, and I never would have thought I'd spend that much on a house.
 
On the commercial real estate world, we would look at a $1.5M 10 unit project at a minimum of a 7% cap rate NNN. That would come out to a required rent of $875 / month / unit. And that's at NNN (renter pays property taxes and insurance and maintenance). You would have to add the monthly prorated cost of taxes and insurance to the base rent which would probably bring the monthly rent to at least $1,100 per month per unit.

That's why I generally stay away from investing in hangars - the market in my area wound not support rent in that range. I can build a metal commercial building off an airport in my area and easily get a 5-7 year lease at a 8+ percent cap rate NNN.

That's why hangars are not typically built by commercial developers.
 
Now SELLING hangars is another story - build one in the range of 5,000-8,000 Sq Ft with an office / apartment inside and it will quickly sell to the rich guys with Citations / King Airs who don't fly their own planes.
 
midwestpa24 said:
Have you looked into the cost of building a house these days? We are getting ready to this year, and I never would have thought I'd spend that much on a house.
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I recently bought a couple of acres and a house in Northern Virginia and yes, the price was eyewatering. Haven't evaluating the cost of building recently so my question still remains as to whether it's materials, labor, ancillaries, or some combination of all of them. Everything seems to have doubled in cost in the last five years for reasons I'm sure make sense to an economist. Myself, I rapidly find myself heading into the territory of the old guys back when I was young who used to complain about prices and tell me about buying sodas for a nickel.
 
I would not do that with a 30 year lease. You should get a minimum 50 year lease. Also the airport will definitely have a cost of living increase in the annual rent, then your county will probably try to tax you on the “improvements”, and then security fees, snow removal fees, etc. There really isn’t profit in it unless you’re in overpriced area (think Denver), where you can sell the $150k hangar for 400k+. But in smaller airports, people might only pay 50-75k for a T hangar.
 
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