Strong Aviation Market in Florida Leads to Multiple Hangar Projects

There is a lot that goes into developing hangars.

Like any other real estate project, the most important criteria is location. Which airports should we invest our efforts in to impact the greatest number of pilots?

Diversified Aviation is a Pembroke Pines, Florida-based hangar development company run by a father-son team. Cary Goldberg and his dad, Alan, have been involved in commercial real estate development for more than four decades and over the past 20 years became involved with on-airport opportunities of their own. 

“Our first project was at North Perry Airport (KHWO), but before that we were doing a lot of legal work, lobbying, and consulting for Sheltair,” Cary Goldberg said. There was an opportunity at this airport, and it was presented to us for review. Commercial retail was our bread and butter, but we looked into this more and decided that it made sense.”

Goldberg said that with he and his father not being pilots themselves, and this being their first owned aviation project, there was quite a bit of self-education to get up to speed. There were some specific industry headwinds that they became acquainted with during this process, which differed from those encountered in retail development. 

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“Neither of us fly, and as we got into this, we figured it out and educated a bunch of lenders [about the aviation market],” he said. “A big challenge in this industry is that lenders don’t really understand the ground lease [with the airport], or that there’s no pre-leasing. You have to educate them and find ones that will work with you, which took us some time.”

Other efforts, like navigating entitlements and various agencies’ requirements, came easy to the Diversified Aviation team, as it was very similar to the work it had been doing for decades in the retail space. 

The first phase of development at North Perry began in 2014 and consisted of 33 hangars. That  initial effort was followed by a built-to-suit, 12,500-square-foot building for Broward College’s aviation program, eight more hangars, and two offices. With all the spaces being filled quickly, the Goldbergs saw firsthand the need for hangar space in Florida.

So they decided to take their efforts two hours up the coast.

“We embarked into Vero Beach [Regional] Airport (KVRB) next, and just hit it off great with the airport staff there,” Goldberg said. “We started with 46 units and have a second phase planned [once those are leased]. We are on track to open this October, and the interest has been very strong. We are entering into leases now.”

In addition to the space for aircraft (14 box hangars and 32 T-hangars are planned), the project will also feature a pilot’s lounge like the one that was built in North Perry. This is a communal spot where pilots can go to flight plan, hold meetings and events, or relax after a flight. The added cost of constructing this nonleased space has been a special touch that prospective tenants enjoy. 

The Diversified Aviation team remains optimistic that it can continue having similar success at other airports.

In addition to searching for airports that are proactively looking for development without onerous red tape involved, one of the things that will enable the company’s continued trajectory is an eye toward construction efficiency.

“The build process for hangars is nothing [once you have approvals],” Cary Goldberg said. “It’s an erector set—you throw them right up. We have put together an ‘off-the-shelf’ program to accommodate prototypical buildings and hangar sizes. We can take those and plug and play, depending on the layout of the parcel, so that we can be more efficient and save money without having to recreate anything. That has really helped us to be more efficient, bring our costs down, and get into the market a lot faster now.” 

This prework has enabled the team to better understand its costs and other factors, allowing it to refine their pitch to airports and municipalities when looking to grow. Diversified Aviation’s newest announced project is in Central Florida, about a half hour northeast of downtown Orlando. 

“We recently signed a lease at [Orlando] Sanford [International] Airport [KSFB] and are going to do 31 units in our first phase there, and have a second phase planned as well. We expect to break ground by the start of the fourth quarter,” said Goldberg, noting that the overall low vacancy rates throughout the state and in-migration to Florida led them to believe this was a good airport to pursue projects. 

Which other markets is Diversified Aviation considering pursuing next? It is still highly involved in scouting opportunities in Florida but has also shifted some of focus nationwide when evaluating prospective new developments. 

“But a big challenge for us, for any developer right now, is the cost [to build] and what you can rent your units for at any particular airport,” he said. “At most airports there hasn’t been a lot of new development of this kind of product for 10, 20 years, so those people who are in current hangars have low rents. These margins that we build out are very slim. These are what I call long-term annuities.”

Goldberg noted that he frequently has this discussion with potential outside partners—from family offices to institutional investors. 

“I love looking for partners—always have, always will,” he said. “The way we work is that we always have money out there that we call pursuit dollars. Our money is always out there for the riskiest point, because we have to do the site plans, the initial ground, the legal aspects, and everything before we close a construction loan and get any of that money back. So, we are always looking for equity partners that want to be in the industry with us, to move faster.”

These partnerships also often morph into Diversified Aviation completing projects as the developer for third parties.