A common sight for passengers flying into and out of Europe are the sprawling business parks found on the perimeter of many of the region's airports. Now, these parks are attracting increasing levels of attention, with international architects being brought in to design eye-catching structures and drab buildings being replaced by high-grade offices with retail and living spaces attached.
Two of the most high-profile examples of this are the Squaire at Frankfurt Airport, which houses the European headquarters for KPMG, and the business park at Amsterdam Airport Schiphol, home to tenants including Microsoft and agricultural and industrial products group Cargill.
Other European cities are taking note. In December 2013, plans for the Circle – a business park project at Zurich Airport – took an important step forward when a joint venture was signed between Zurich Airport (51%) and insurance company Swiss Life (49%). The backing of these two strong project sponsors will in turn help bring in bank debt.
The Circle is part of the effort to transform Zurich Airport from a pure transport hub to an attractive business destination. Hotel chain Hyatt has already signed a management agreement to run two hotels at the facility, which will also feature restaurants, retail and cultural spaces. A final decision to proceed will be made at the end of 2014, with a plan to open by 2018. Total project costs are estimated at about SFr1bn ($1.11bn).
New work cities
According to Richard Florida, professor of business and creativity at the University of Toronto, the clustering of creative staff in cities, regions and neighbourhoods spurs innovation and competitiveness. He argues that in the age of globalisation, the fostering of innovation and competitiveness needs a new, higher velocity for moving goods, people and ideas. In this context, airport cities located in hubs such as Amsterdam, Brussels and Antwerp are gaining in importance.
“Simply put, the ability to move people who generate and share knowledge – the creative class – matters greatly in the creative age,” says Mr Florida. “In a world driven by mega-regions, connectivity matters more than ever before and successful companies understand this. We are already seeing companies organise their business operations and units around economic nodes rather than national borders."
At the March 2013 Mipim real estate fair in Cannes, the Squaire received the Mipim Award for best office and business development. The building was developed by airport owner Fraport and Germany-headquartered IVG Immobilien, which has its own portfolio of office buildings, in addition to constructing and managing assets for third parties.
The Squaire was built on top of a long-distance railway station, which has Intercity Express high-speed connections to cities across Germany, including direct services to Cologne, Hamburg and Berlin. Designed by Frankfurt-based architect JSK International, The Squaire markets itself as a 'new work city'. It has pedestrian access into terminal one of Frankfurt Airport and houses two Hilton hotels, restaurants, fitness centres and a day-care centre, in addition to business and conference centres.
For Germany’s flagship airline Lufthansa, one of the Squaire’s anchor tenants, it is an obvious choice of location, but the presence of KPMG illustrates how high-grade office space linked to air and rail connections can be of benefit to highly mobile executives such as consultants. KPMG moved into the building in May 2011, and accounts for 40,000 square metres of office space and 2150 of the 7000 employees located there.
Age of the aerotropolis
"It is important to differentiate between business parks that are located adjacent to airports and developments such as the Squaire, which have a distinct philosophy, and which combine living, retail and office space, while also offering a high level of services to tenants," says Dr Thomas Beyerle, managing director and head of corporate sustainability and research at IVG Immobilien in Bonn, Germany.
Mr Beyerle points to the ideas of economic sociologist John Kasarda, who has identified the aerotropolis as a place that integrates innovation, production and logistics clusters. Mr Kasarda argues that airports will shape business location and urban development in the 21st century as much as highways did in the 20th century and railroads in the 19th.
Zachary Gauge, a researcher at London-based real estate consultancy CBRE, says that in addition to making use of the good rail and road links around airports, global air connections are of particular significance to multinational firms based outside Europe, such as those in the technology and telecommunications sectors. Indeed, of the non-European tenants at key European airports, more than 70% are located at an airport that has direct flights to the city in which their global headquarters is located. Microsoft is one example of this, with direct flights between Amsterdam Schiphol and Seattle-Tacoma airports.
"We are seeing more developments at the planning stage, for example Zurich and Manchester, though it is usually necessary to get some big anchor tenants lined up before bank lenders will provide financing," says Mr Gauge.
Companies are also clearly attracted by the lower rental rates offered by airport office space compared with downtown business districts, although prices at airport business parks are rising.
More developments are on the way, although the weak economic environment has made project sponsors slower and more cautious than they would have been in more buoyant conditions. In addition, many bank lenders have scaled back from exposure to speculative commercial real estate developments, so projects are finding it difficult to put financing in place. But as Europe gradually recovers from the financial crisis, activity is picking up. The long-delayed Berlin Brandenburg International Airport has plans for office space, as do Manchester, Warsaw and Stockholm.
Manchester Airport City is a £800m ($1.31bn) development, which will provide 464,517 square metres of office, hotel, advanced manufacturing, logistics and warehousing space. It will be one of the largest regeneration schemes in the UK since the 2012 Olympic Games redevelopment in east London.
Manchester Airports Group (MAG) began its search for joint-venture partners at the end of 2012, advised by CBRE and international law firm Eversheds. The goal of the international search for investors was to secure partners that could provide global development expertise, plus access to international occupiers and financing capabilities. The eventual choice of Chinese partners illustrates the intention of Manchester Airport City to create strong links with the increasingly important Chinese business sector.
In October 2013, MAG announced a joint-venture agreement with Beijing Construction Engineering Group, Carillion and the Greater Manchester Pension Fund. Carillion designs, finances, builds and maintains schools, prisons and other facilities, and is a major player in the UK public-private partnership market.