Commercial Real Estate and Airlines and Indianapolis International Airport and Indianapolis Airport Authority and Commercial Leases and Real Estate & Retail and Transportation, Distribution & Logistics

Airport terminal to rent out space, keep many employees in old facility

November 10, 2008
The new, $1.1 billion terminal at Indianapolis International Airport likely won't house as many airport employees as the existing facility. Instead, portions of the terminal are being set aside for their revenue-generating potential.

Essential departments for operations, such as airport police and information technology, have already moved to the Col. H. Weir Cook Terminal, but the engineering department, for example, will not make the move, airport officials said.

Already, space on the upper floor of the terminal that had been allocated for accountants is being looked at for possible use as a conference center and areas designated for Indianapolis Airport Authority staff on the second and fourth floors are being eyed for other revenue-generating uses.

The terminal opens Nov. 11.

"The space in the new terminal building is extremely valuable," said John Kish, executive director of the Indianapolis Airport Authority.

Retail and other so-called non-airline revenue is crucial to cushioning the debt burden that airlines are being saddled with for the new facility.

Bond debt comes due starting next year, at roughly $40 million a year. It will be raised primarily from increases in retail-space rent and other fees paid by airlines.

The new terminal comes on line as a recession hits and as airlines reduce capacity.

When planning began seven years ago, the terminal was to have had a fifth floor, which could have housed more airport personnel. But that concept was shelved early in the process as costs grew.

Airport officials said leaving behind some personnel at the six-story airport authority office building at the existing terminal is practical because it helps preserve the building for future use. The fate of the existing terminal has yet to be decided by the airport board, though cargo or corporate aviation uses are among the possibilities.

"I think it's important to realize the building needs to be operated one way or the other to keep it alive," Kish said.

But some office equipment vendors say there's another reason many of the airport's 430 employees won't be moving to the new terminal: a botched bidding procedure for new office furniture.

The vendors, who asked not to be named because they continue to bid on work for the airport, complained that the firm the authority tapped to write bid specifications favored a particular furniture manufacturer. Vendors claim one of the employees at the consulting firm who worked on the bid specifications has a daughter who works for the preferred furniture company's local retail arm.

The authority wound up scuttling the furniture bid.

Kish acknowledged that the authority received such a complaint from at least one vendor. But he also said the rebidding now under way was also the result of a re-examination of whether the airport needed as much furniture at the new terminal.

"There was a question of whether we should be buying, or using some of the old stuff" as well, he said.

Whatever the motivation, the furniture package has been rebid, with bids to be opened Nov. 25. The bid package is estimated to be worth $1.5 million to $2 million.

"We're several hundred thousand dollars below where we were at the first go-around," Kish said.

Vendors are dubious about the savings, noting the airport will incur additional costs to pay a moving company to haul old furniture to the new building.

The airport authority has a number of other office facilities at the airport, including at a former US Airways call center that's separate from the old terminal.

Such locations are usually preferable for airport departments, such as engineering, that don't need to be in the main terminal. A remote location allows employees to avoid fighting crowds at the passenger terminal.

Source: XMLAr00800.xml
ADVERTISEMENT

Recent Articles by Chris O'Malley

Comments powered by Disqus