Bidding for hangar lease???

kep5niner

kep5niner

Pre-takeoff checklist
Joined
Oct 5, 2018
Messages
324
Display Name
Display name:
Pete
Has anyone ever heard of an airport leasing hangar space to the highest bidder? The thought process is to get away from the infamous waiting list that seems to be at every airport, giving someone on the bottom of the list the chance to actually get a hangar.

While that could seem advantageous to the municipality that runs the airport (maximizing profit), the costs of hangar leases could overall rise for all tenants. Would you have to bid for your hangar every year? That could complicate planning and budgeting, for instance not knowing how much your hangar will cost, or if you'll be outbid every subsequent year.

I was recently in a conversation with some airport decision-makers, and as an airport user, something just didn't sound right with the concept. Is bidding for a hangar lease a common practice? What say you PoA?
 
I’ve heard this mentioned a few times. On one hand, it might clear out the guys with a “project” plane that hasn’t flown in 50 years to make room for planes that actually fly.

On the other hand, it would obviously drive up costs.
 
As usual the people with the money would win out. Availability might increase .
 
I concur with getting the "project" planes cleared out - that was also part of the conversation - enforcing hangar utilization for aircraft that are not only airworthy, but actually fly (buy gas).
 
Honestly, if I had to bid my hangar lease each year, I’d find a new base. If my rates rose to match the highest bidder, I’d find a new base. If I was #1 in the list and some jackwagon with more money than patience wanted to bankrupt me over a hangar space, I’d find a new base.

The only ones who benefit from an auction is the seller and the auctioneer.
 
I've heard of it. It does allow the hangar to produce the revenue the market will bear. Even though as a pilot we thing hangars are expensive, they are probably one of the cheapest per square foot commercial storage units out there. It does also change the dynamic of the hangar waiting list, but tilts the odds towards the wealthy and leaves the lower income aircraft owners out to dry.
 
I’m also not convinced it does anything to clear out space. Those are hypotheticals.
 
How many airplane hangars are used to store non airplanes
 
Racerx said:
How many airplane hangars are used to store non airplanes
Click to expand...

Probably a lot. The question is, are the people using them for other storage wealthy or not? If they're wealthy, they'll just keep them anyway.
 
Racerx said:
How many airplane hangars are used to store non airplanes
Click to expand...

If there are aircraft owners on a waiting list, the answer to that should be zero. Otherwise, if it is an airport that receives federal funding, they are in violation of their Grant Assurances.
 
In these parts a 10'X30' storage unit is in the $350.00 a month range. Better deal to just rent a 40'X40' hangar and put all your stuff in it.

Makes me sick that folks do this and most airports here will not allow non-aviation items in a rented hangar (yes pilots need a lounge, airport car, motorcycle, ect). But those that own these hangars seem to do what they want with them.

I've been very blessed in finding hangar space over the last 20 years ...
 
midwestpa24 said:
If there are aircraft owners on a waiting list, the answer to that should be zero. Otherwise, if it is an airport that receives federal funding, they are in violation of their Grant Assurances.
Click to expand...

While true, my preferred has not and does not receive federal funding. It’s entirely private.

The owner has been building a couple of new rows of hangars a year and prices still remain where they’ve been for at least six years.
 
Our field has city-owned hangars with waitlists and also “free-market” hangars.

City T-hangars are $250/mo. I haven’t checked what the “free market” rates are, but last I saw, about $750/mo. - at least. Similar hangars.

Oh, and if your wingspan is such that it doesn’t fit in a standard T, you’re going to be paying MUCH MUCH more per sq ft.
 
Weird to see vilification of the impatient and moneyed who have new planes and want hangars. Isn't that healthy GA?

I think a well managed airport would do exactly this, but an incumbent tenant gets first right of refusal at the new bid price (meaning they always win a tie)

Hangar storage in a built-up area is SO gd cheap vs anything else, I can't imagine any serious complaints. We had a problem at KHIO Portland OR of local businesses using aircraft hangars for warehouse space because it was appx 1/4 the going rate on the other side of the fence (aka "reality")
 
schmookeeg said:
…Hangar storage in a built-up area is SO gd cheap vs anything else, I can't imagine any serious complaints. We had a problem at KHIO Portland OR of local businesses using aircraft hangars for warehouse space because it was appx 1/4 the going rate on the other side of the fence (aka "reality")
Click to expand...
That’s the heart of my complaint. As a private person, I can’t compete against a commercial business when it comes to expense outlay.
 
Ooh we're gonna head into a societal debate here :D, but what is the counter-argument to "Society has better uses for that hangar/land" ? I don't feel that we are entitled to below-market-rate hangars, land, or services.

The businesses are rational. Our airport managers are not, and are creating a weird subsidy that will be indefensible IMO.
 
Hmm, tough one….

Would I want to bid on a space every year? Absolutely not, getting an airplane is a big deal, it’s not easy to sell them (I’m guessing given how much back and forth and time went into buying one), part of getting an airplane is getting a space to park it, kind of a package deal. I would not want to play musical chairs with the airplane and hangar, sounds awful! Especially given the limited supply at each airport (it’s not like you can build thousands of hangars at one airport), you’d likely be pushed to park outside or move airports (yikes) if in a hurry. I’ve had my hangar for nearly a year and I’m still working on some things. It takes time to get it cleaned up, organized and decorated the way you want it.

I imagine the annual lease bid would be around Dec/Jan, who wants to deal with that headache then? For people in the north that is winter time.

Now the requirements of an airplane and use of hangar for storage. That’s a tricky one. There’s a huge hangar next to me the guy must have 3 airplanes and 12+ cars. That’s his hangout spot, doesn’t bother me. Everyone has their own project and when they want to move on that’s their own decision. If you sell a plane and are looking for another one, I don’t think that means you should lose your hangar space as long as you are paying the bills. That’s why buying your hangar can be a good idea too. A lot of new players come into aviation, drop a lot of doe, but they don’t last and move onto something else. You rather have the experienced folks who are active in the community staying there instead of being priced out by a newbie guy who is short lived.
 
Most of this can be avoided with active airport management that actually enforces a requirement that hangars contain airworthy aircraft or active projects. Too many hangars full of dust-covered airplanes and TONS of non-aviation storage. Several at my airport that couldn't even be worked on or removed from their hangar because there's so much misc. storage piled around them. Kick those guys out, get active airplanes in.
 
There’s also no way to know the guy outbidding everyone is serious and takes possession of the hangar. Anyone can talk…

Someone needs to define what actively flying is, it may be seasonal for some, and also need to define what storage of non-aviation items means.

If I get another airplane that means the other will be flown less. Some people have many airplanes, I don’t see an issue with that. New people can look into buying land from the airport and building a hangar if they are really interested. I’m sure they could get ahold of the waiting list for hangars at the airport and get a group together.
 
mandm said:
There’s also no way to know the guy outbidding everyone is serious and takes possession of the hangar. Anyone can talk…

Someone needs to define what actively flying is, it may be seasonal for some, and also need to define what storage of non-aviation items means.
Click to expand...
I would say airworthy (current annual). Of course that creates problems for E/AB that are being built. Maybe an exception for those where they have some period of time to get their airworthiness cert.
 
donjohnston said:
I would say airworthy (current annual). Of course that creates problems for E/AB that are being built. Maybe an exception for those where they have some period of time to get their airworthiness cert.
Click to expand...

Need to have some grace period too, given labor and parts shortages, not sure it’s fair to place that blame and responsibility on aircraft owners.
 
donjohnston said:
I would say airworthy (current annual). Of course that creates problems for E/AB that are being built. Maybe an exception for those where they have some period of time to get their airworthiness cert.
Click to expand...

Good idea except ... I've known builders that took 10 years or more to scratch build a plane ... but it flew when finished and it flew very well!
 
Daleandee said:
Good idea except ... I've known builders that took 10 years or more to scratch build a plane ... but it flew when finished and it flew very well!
Click to expand...

Land use could in theory be further defined?

30% corporate aviation
30% GA certificated aircraft
30% experimental / builds
10% other
 
schmookeeg said:
Ooh we're gonna head into a societal debate here :D, but what is the counter-argument to "Society has better uses for that hangar/land" ? I don't feel that we are entitled to below-market-rate hangars, land, or services.

The businesses are rational. Our airport managers are not, and are creating a weird subsidy that will be indefensible IMO.
Click to expand...

Counterpoint: if there’s a use agreement saying hangars are for aviation only uses, should the local pot growing organization be able to take advantage of subsidized space simply because their product gets you “high”?

Airport managers are a part of the problem. So are local governments, and hangar owners themselves.
Plane owners aren’t the problems.
 
bradg33 said:
Most of this can be avoided with active airport management that actually enforces a requirement that hangars contain airworthy aircraft or active projects. Too many hangars full of dust-covered airplanes and TONS of non-aviation storage. Several at my airport that couldn't even be worked on or removed from their hangar because there's so much misc. storage piled around them. Kick those guys out, get active airplanes in.
Click to expand...
Absolutely! That’s what we’ve been doing here. Yearly lease compliance checks assist on matters like this.
 
IF I were ever to do a bidding process for hangar rental, the way I would do it is for available hangars. I would not do it for occupied hangars. The rate would be bid, then that rate would continue with annual CPI increases, which is what we already do.

T-Hangars have always been an oddity in the pricing game. In the state of Iowa, T-hangars usually range between $100-200 per month, with a handful of outliers on either end. But if you were going to try to make a business case to fund and build the hangars, and assume a 15 year amortization, that rate would need to be $800 per month. A bank of 10 T-Hangars is currently estimated at $1.5 million to build.

$1.5 million / 15 years is $100,000 per year
$100,000 / 12 months is $8,333.33 per month
$8,333.33 / 10 hangars is $833 per hangar per month

All assuming no interest, no maintenance, no utilities.

The only way it works is grant funding and subsidization. Of course the airport receives the fringe benefit of fuel sales, etc., from based aircraft, but lets face it, Avgas sales are not supporting the operation of most airports.
 
SkyChaser said:
Probably a lot. The question is, are the people using them for other storage wealthy or not? If they're wealthy, they'll just keep them anyway.
Click to expand...
Daleandee said:
In these parts a 10'X30' storage unit is in the $350.00 a month range. Better deal to just rent a 40'X40' hangar and put all your stuff in it.

Makes me sick that folks do this and most airports here will not allow non-aviation items in a rented hangar (yes pilots need a lounge, airport car, motorcycle, ect). But those that own these hangars seem to do what they want with them.

I've been very blessed in finding hangar space over the last 20 years ...
Click to expand...
When I had a hanger, I was paying $400/mo, and I had a hard time justifying it. At the same time, I was paying $350/mo for a storage space that was roughly half the size. Then again, the airport benefits outside of hangar rent from having airplanes on site.

The optimum price for hangar rent is the price at which no one else (within the target market) is willing to pay more for the hangar than someone who has one. So I've got no problem with pricing them by bidding. And if the bids get high enough, more hangars will be built. Suppressing rents below what the market will bear artificially reduces supply.
 
Supply and demand, the basis of capitalism. With all the consolidation in the storage industry, storage has become very very expensive. I know guys paying $600 a month to store a Class A Motorhome. My son was paying $350 a month on a storage unit.

Hangars around these parts have been going up every month (privately held hangars). I locked in my rate by paying it yearly, in hundred dollar bills.

I have asked a municipal airport that is on the edge of the DFW metromess about bringing in a group of investors to build a bunch of new t-hangars. They weren't interested, even though they have a 3-4 year waiting list.

And as far as
A bank of 10 T-Hangars is currently estimated at $1.5 million to build.
Click to expand...

I don't know if that's because it's up north, or what. That's $100 a foot. I can nearly build a house for that.

We did some estimates, and they were under half of that per block. That's including all the new requirements such as 8" concrete and sprinkler systems. I own a construction company and could have GC'd it and my theoretical profit would have been my investment in the deal.

This was back when interest rates were going to cost us about 3.5% and we figured at $450 ($400 to us and $50 for the ground lease) a month we could recoup our investment in 5-6 years and have 14-15 years of mailbox money until the end of the ground lease.

At the time self storage investment deals were returning the investment in 3-4 years, but the guys I lined up were all pilots and were happy with a slower return (as they would also be paying rent)

The airport manager didn't want the hassle. The mayor is a good old boy and really hates all the people moving in from the big city. The City Manager was behind the deal, but couldn't get the elected officials to budge. They thought they could build them and then profit from them, but then lost interest to move on to more important matters. I screwed up by not getting a local guy to be the front for the deal.
 
cowtowner said:
I don't know if that's because it's up north, or what. That's $100 a foot. I can nearly build a house for that.
Click to expand...

Its Iowa, but $100 a square foot is nothing around here. Homes right now are near $300 a square foot, and this is the rural part of the state, not big city pricing. Prior to COVID housing was closer to $200 a square foot.
 
Yeah, I'm very sympathetic to the supply/demand argument, but also the fact that the uncertainty of price year-over-year is a disadvantage to the product. This is one of those places where a middle-ground approach could work.

For example: Field has 50 hangars. Assuming current leases can be terminated, give notice to everyone that their lease terminates 2025. Take bids for leases starting in 2025. The 50th-highest bid is the set price for a 5-year lease starting in 2025. Repeat the process in 2030.

Example 2: Look at your current lease rate. Do whatever you have to do to allow lease prices to change up to some fixed amount (5%?) per year. Any time you have more than 3 people on the waiting list, everyone's price goes up 5%. Any time you have more than 3 hangars empty, everyone's price goes down 5%.

Example 3: Same as above, but some percent (maybe even half?) of your rent can be paid by fuel or FBO sales (possibly at a ratio). (e.g. rent is $300/mo. If you buy $300 in fuel on base, rent is $150.)

Anyway, to answer the question, wild price swings every year seems like a bad idea, but some basic supply-demand matching seems reasonable...
 
midwestpa24 said:
If there are aircraft owners on a waiting list, the answer to that should be zero. Otherwise, if it is an airport that receives federal funding, they are in violation of their Grant Assurances.
Click to expand...
Was exactly my point. I'm based at a private airport so it doesn't apply. But a customer of mine purchased or leased a large hangar for his non aviation business. There's a chance an exemption was granted as its kind of in a corner and no taxiway centerline like where the other hangars are.
 
If prices go up, people will build more hangar. Then prices will go back down.
 
Salty said:
If prices go up, people will build more hangar. Then prices will go back down.
Click to expand...

They are not building more hangars as there is too much government red tape. The waiting list at my airport is about 80 people and I am already paying almost $500/mo.
 
DesertNomad said:
They are not building more hangars as there is too much government red tape. The waiting list at my airport is about 80 people and I am already paying almost $500/mo.
Click to expand...
Eventually the price will be high enough to overcoming the red tape.
 
My favorite topic. As an Aviation Real Estate Broker, pilot, and aircraft owner, I've seen it all. Heading out for dinner. I'll weigh in later...
 
KBED won't build new hangars... despite the multi-year waiting list.

New hangars would be (mis)construed as an expansion of the airport, and the whiny airport neighbors would go ballistic.

politics... mumble mumble...
 
Salty said:
Eventually the price will be high enough to overcoming the red tape.
Click to expand...

Denver :D
Yeah that works in the HOT areas, but how about the other thousand cities.
 
Waiting list at our airport for small hangars is 5 years. “Large” hangars are “10+” years.
 
Since the wealthiest people generally pay the most in taxes, there's nothing wrong with them bidding up the price and getting the lion-share of the available hangers.
However at the end of the day there really are no fair or moral systems if we're talking about government run airports. You can't build a genuine free market on top of a system based on violence.
 
You must log in or register to reply here.
Back
Top