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HAYWARD, CA-Ascend Development, a locally based airport real estate company that develops luxury hangars for private jet owners and commercial real estate investors, is taking its product to new markets after experiencing strong demand at Hayward Executive Airport. The company inked a long-term ground lease for land at Stewart International Airport in Newburgh, NY last week and is negotiating for land at Austin-Berstrom International Airport in Austin, TX, and several other airports around the nation.

The $90-million, multi-phase project at Stewart International Airport will cover 32 acres and include 41 hangars totaling 500,000 sf, making it one of the largest private hangar developments in the US. The development site is located on the Northwest side of the airport, adjacent to route 17K between Interstate 87 and Interstate 84. A groundbreaking is scheduled for 2007.

The expansion comes on the heels of a successful project at Hayward Executive Airport. The hangars there are constructed of steel and sided with steel architectural panels and glass. The interior is completely finished with sheet rock and painted and can include custom flooring featuring a company logo or family crest. Other amenities include relaxation rooms, private crew quarters with showers, private offices, 24/7 online video security, wireless Internet, satellite television, biometrics and key pad security access and private gated entries.

The hangars are sized to accommodate a range of business jets including Boeing Business Jet, Gulfstream V and Global Express as well as the owner’s land vehicle. Ascend development principal Gary Briggs tells GlobeSt.com the 59,000-sf, six-hangar first phase of its Hayward development sold out prior to completion in 2003 and the 80,000-sf, nine-hangar second phase of development, which is about 10 months from completion, is more than 65% pre-sold.

“We formed the company to address what we saw as a shortage of high quality corporate hangar space,” says Briggs, whose experience includes 30 years in corporate aircraft ground support, managing fixed-base operators. “We’ve been successful not only because of the shortage but also because we emphasize privacy, security, creative design and high quality, which owners and investors desire and we offer the hangars for purchase or long-term lease.”

Moreover, Briggs says the company’s luxury hangars at Hayward Executive Airport are performing well for both owner-users and investors. Excluding asset appreciation, first-phase investment buyers have experienced first-year returns of about 8%, Briggs says, while the owner-users have been delighted to have the nicest, most sophisticated hangars at the airport and the security of long-term control. As part of its service, Ascend offers a turnkey rental program to investors.

“Nationwide there is a huge backlog of new jets on order from companies and high-net-worth individuals, it’s really taken off,” Briggs says. “So demand is really high; combine that with a very limited amount of hangar space in major markets and there’s an opportunity to go above and beyond the typical shelter hangar and cater to the top end of the market.”

Briggs says there are as yet very few competitors in his niche, in part because of the expertise necessary to understand the airport real estate market. The biggest hurdles are obtaining land at the right airports and financing the developments. “Small community banks are what we’ve had the most success with, because they have some knowledge of the market and can investigate it deeply enough to decide it makes sense,” Briggs says. “We started out just focused on airplane owners and eventually discovered that there is interest from the investment side to own them as pure rental properties.”

The cost to buy the first phase hangars at Hayward Executive Airport were $114 per sf. Due to demand and rising land and construction costs, the cost to buy the hangars in the second phase is upward of $170 per sf. The price at Stewart International Airport will be at least $225 per sf.

As for rental income, Briggs says his largest high-end hangars–capable of housing a Gulf Stream Five or a Boeing Business Jet along with all the other amenities and a large land vehicle such as a motorhome–rent for $20,000 to $30,000 per month. Some investors buy one of the company’s larger hangars and lease them to multiple airplane owners. One of the larger hangars accommodate as many as 10 of the Very Light Jets that are coming to market, such as the Eclipse 500 and the Cessna Citation Mustang, Briggs says.

Ascend itself doesn’t own any of its existing hangars as rentals because demand has been too high and all the company’s resources are focused getting future projects teed up. “The development timeline is quite long; it typically takes two years to secure land and get prepared to build,” Briggs says. “It’s a fairly involved bureaucratic process so you need to know the system and have multiple sites in play in order to develop a regular pipeline of work.”

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