How are hangar prices decided?

So then, we are all in agreement.

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Clip4 said:
If it is so easy and there is so much demand, can we look forward to you getting off your ass and putting up some hangars?
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Unfortunately airport owners (public and private) hate competition. So whenever I tried to get a land lease to build a block of carousel hangars it goes nowhere.
 
Basic answer is supply and demand. Anytime you ask "how are prices decided", S&D is the answer.

This does not mean the market is efficient in reacting to changes. One of the problems with government management is slow speed in changing. There are two numbers in play here - the real price being asked the the theoretical price that the market would set absent friction. If you are seeing a shortage in units, the real price is too low and/or the supply is too low...the price should be raised or more units added.
 
weilke said:
Unfortunately airport owners (public and private) hate competition. So whenever I tried to get a land lease to build a block of carousel hangars it goes nowhere.
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Sometimes it takes the right lawyer to knock some sense into the airport sponsor. Many people, including airport sponsors, do not seem to know what is in the grant assurances that might help them in this situation. That’s why I inquired with Brad about the status of VKX when the comment came up that the rent was all over the board for a given square footage.

I type this as I’m sitting in a beautiful hangar a friend built on a public airport where both the city and the former airport manager put up roadblock after roadblock because there were control issues. It took 2.5 years to get somewhere on the project but things happened quickly once the correct lawyer was employed to handle the situation. Most people do not seem to want to go the extra mile to get things done, and give up way too easily.
 
mondtster said:
Sometimes it takes the right lawyer to knock some sense into the airport sponsor. Many people, including airport sponsors, do not seem to know what is in the grant assurances that might help them in this situation. That’s why I inquired with Brad about the status of VKX when the comment came up that the rent was all over the board for a given square footage.

I type this as I’m sitting in a beautiful hangar a friend built on a public airport where both the city and the former airport manager put up roadblock after roadblock because there were control issues. It took 2.5 years to get somewhere on the project but things happened quickly once the correct lawyer was employed to handle the situation. Most people do not seem to want to go the extra mile to get things done, and give up way too easily.
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Building anything on an airport requires the ability to put up with never ending heaps of ********. So I can either spend 2 years of negotiating and paying lawyers before the first footer gets poured or I can go flying and put my money in some less aggravating investments.

If I didn't know that my wife would smother me in my sleep if I did, I would just buy my own little airport. 'Washington Field' (70MD) in Nanjemoy, MD is for sale. No potential as a public airport, but may support a mini airpark.
 
weilke said:
Building anything on an airport requires the ability to put up with never ending heaps of ********. So I can either spend 2 years of negotiating and paying lawyers before the first footer gets poured or I can go flying and put my money in some less aggravating investments.

If I didn't know that my wife would smother me in my sleep if I did, I would just buy my own little airport. 'Washington Field' (70MD) in Nanjemoy, MD is for sale. No potential as a public airport, but may support a mini airpark.
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Understood, I’m just saying that a lot of people don’t know what they can and can’t do. They give up too easily or are too cheap to pay a lawyer to help them get done what they want to get done. I consider it a re-education process, although I’m sure some people would take it more personal and hold a grudge. Then you get to deal with those people until they’re gone.
 
mondtster said:
Understood, I’m just saying that a lot of people don’t know what they can and can’t do. They give up too easily or are too cheap to pay a lawyer to help them get done what they want to get done. I consider it a re-education process, although I’m sure some people would take it more personal and hold a grudge. Then you get to deal with those people until they’re gone.
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They are public employees. They are never gone..... They also spend public money to stonewall you while you have to spend your own.
 
weilke said:
Unfortunately airport owners (public and private) hate competition. So whenever I tried to get a land lease to build a block of carousel hangars it goes nowhere.
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The airport committee here, at least as of their last meeting, would love to have someone do that. The problem is that whenever someone proposes it, they go away to do the math and never come back after realizing they can't compete with the city's hangar prices. Even though there's a waiting list of 10 people for the city hangars, they're really cheap so no private company has figured out how to make it a good investment.
 
weilke said:
They are public employees. They are never gone..... They also spend public money to stonewall you while you have to spend your own.
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Not all of them are city employees. Many small airports have a contracted individual as the airport manager, who often runs the FBO as well. Those guys are often the worst due to a conflict of interest but with a little work you can eventually get rid of them.

The city employees are often the hard part to deal with and they do indeed have the government money to spend fighting you. That’s where having the right lawyer involved is worth it’s weight in gold. In another airport matter a business associate and I retained a local lawyer, who was worthless and just cost us money. For my friend’s hangar, he found a specialty lawyer out of CO who had things straightened out in minimal time, after he tried to do it on his own for the first couple of years.
 
chartbundle said:
The airport committee here, at least as of their last meeting, would love to have someone do that. The problem is that whenever someone proposes it, they go away to do the math and never come back after realizing they can't compete with the city's hangar prices. Even though there's a waiting list of 10 people for the city hangars, they're really cheap so no private company has figured out how to make it a good investment.
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That’s because they’re seeing the difference in costs between what paying 100% of the construction costs are and what paying 15ish percent of the construction costs. The hangar rates are often based on those costs.

A lot of the guys wanting to put up private hangars are all for it when they think they’ll get their own hangar for a fraction of the actual cost. They back out as soon as they find out they may not get that federal money. Always wanting something for nothing...
 
""""""How are hangar prices decided?"""

Econ 101............................Supply and demand!!
 
If we raise hangar rates to something more sustainable, then we are accused of being anti-GA and are what is wrong with aviation. Even suggesting a $5 increase brings out the pitchforks.
 
midwestpa24 said:
If we raise hangar rates to something more sustainable, then we are accused of being anti-GA and are what is wrong with aviation. Even suggesting a $5 increase brings out the pitchforks.
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I think most people would prefer that you increase the supply.

There's nothing in supply and demand that says you must set your price at the market price. There are consequences for not doing so, but if you're will to take those on, then no worries.
 
We would love to increase supply, and at our airport are supportive of private builders. We know what number we would need to cover the expenses, but it is over double the current rate.

Being in airport management is a government job, but can also be highly political as well. You make the wrong enemies, you are looking for a new job, and in this industry that means uprooting and moving your family to the next city/airport.

The last time we had a minor rent increase, we had pilots fuming mad, and demanding management changes.
 
If you have a wait list, and it's any size at all, most of those people would be willing to pay at LEAST $5 more to get a hangar. I don't know about anyone else, but I'd happily sign a contract for a hangar at a higher price, contingent on one becoming available. See if you can get several of those contracts signed, and then show the city the potential increase in revenue. If someone *******, there's proof someone is waiting to take that hangar, and it'd be a GA tenant. Hard to claim anti GA if a GA person takes it at the higher price.

Take my example above. Let's say current rent is $185. I'd sign for $300. So, that's $115 more a month. Let's say you get 15 people on the wait list to commit (signed lease, contingent). That's $20k more a year for making a few phone calls. And every person that gets a hangar is going to be grateful and happy with your management. :)
 
I paid $375 at CHD, now pay $500 at P19. CHD has city owned hangars for $200 but the wait list is 7-10 years. I'm guessing we couldn't get a hangar at CHD anymore for under $450. Scottsdale was $800 last I checked (unless you can get a city hangar but again... 7-10 years)

Where I work we have T hangars for $120-$140 a month and they're awful Talking dirt floors, the walls are definitely not keeping dirt/dust or even all the snow out. The doors suck and there is no electricity. But there's a wait list because they're cheap (usually 5 people but maybe once person every other years leaves them). City has T hangars that are a lot nicer with electric for $250-$300. Took a year to fill 8 spots but they are all full, no wait list. Community hangar for a single is $250-$350 depending on the single engine size but they're all heated and if you need plugged in they can do that too (plus they pull you in/out). Plenty of openings and no wait-list. The "good ol boys" complain quarterly at the GA committee meetings that there is a great hangar shortage. There isn't. There is a shortage of cheap hangars. Besides, all of them have hangars and they're cheap!

You can't build T hangars here and make them cash flow for under $600-$800 per month per unit assuming 10 units. The crappy T hangars I talked about above have to be torn down in 3 years per the lease that they're on (they're fugly, taxi lanes aren't legal size and they're the wrong direction, can't blame the city) and the FBO has no plan to replace them due to the cost, or so I'm told. 75% of them are full of airplanes that aren't airworthy anyway.
 
midwestpa24 said:
We would love to increase supply, and at our airport are supportive of private builders. We know what number we would need to cover the expenses, but it is over double the current rate.
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The current rate is a subsidy that keeps the private sector out and maintains the shortage. Funny how that works.
 
Thread hijack, but how is the effort going to reduce non aviation uses of hangars on federally funded airports?
 
RalphInCA said:
Thread hijack, but how is the effort going to reduce non aviation uses of hangars on federally funded airports?
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Our hangar recently changed hands (via outright theft) and is now owned by the city. The door still leaks, but now we have rules, upon rules, and more rules. In addition to restricting the number of bottles of oil on the shelf, they only allow a single car while the plane registered to the hangar is gone.
 
kgruber said:
""""""How are hangar prices decided?"""

Econ 101............................Supply and demand!!
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Have you ever read Quora? It's a mostly lot of people giving bad answers to bad questions, but every once in a while, somebody comes up with a real nugget. In an answer to an economics related question, this fellow dropped in something that the economics major in me had forgotten. In undergraduate level economics, the first semester is typically microeconomics (the study of the behavior of businesses) and the second semester is macroeconomics (the study of the behavior of entire economies). In both of these, the examples given involve the marketplaces described by classical economists such as Adam Smith. These examples are valid in a marketplace inhabited by many buyers and many sellers, for very similar products, where both buyers and sellers have good information. Once you are past the two intro courses, you spend the rest of your education working on learning how the modern world actually works, which is vastly more complex. There are monopolies, duopolies, anticompetitive practices, hoarding behavior, panic behaviors, power relationships... anyway, you get the idea. It's much like your high school physics class, where you were given simplified problems where some very important real world behaviors, like drag and friction, are left out.

The way you can tell that the pricing for hangars is not strictly governed by supply and demand is that if they were, waiting lists would be short, if there were any at all. For example, not too far from my office is Peachtree DeKalb Airport. PDK recently shut down a short, seldom used runway to build more hangars. Even after that, the waiting list is so long that I think they have stopped taking names. Quite clearly, the existing hangars are underpriced for the given market. If the county raised prices enough, many of the the existing tenants would leave, and the hangars would be rented at higher prices. The county is not a profit maximizing organization, so it does not. It is subject to political pressure, but it does not have to make a profit off of the airport any more than than it does off of a public park.

Have you ever noticed that there are practically no privately owned airports left in metro areas? This has not always been the case, up until the 70's there were quite a few around, but eventually nearly all of them closed because the land values got high enough to where it was no longer economically viable to keep that piece of property as an airport. So why do governmental bodies maintain airports? It is in the hope that the airport will be an appealing feature to a business and that business will locate within that municipality. If the airport provides a home for some of its citizens' private airplanes that's fine, but that's not why the airport is there.

If it were a competitive market governed by supply and demand, prices would rise to a market clearing level and the wait for hangars would be minimal.
 
I wish I could 'like' a post more than once.
 
Well if the government is involved we should have some Section 8 Hangars for the poor or less affluent airplane owners from the other side of the runway.

;)
 
SkyDog58 said:
Well if the government is involved we should have some Section 8 Hangars for the poor or less affluent airplane owners from the other side of the runway.

;)
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We already do. The way hangars are allocated reminds me of NYC rent controlled apartments.
 
FormerHangie said:
If it were a competitive market governed by supply and demand, prices would rise to a market clearing level and the wait for hangars would be minimal.
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And you’d also have what is happening in California. People want to flatten airports to make room for a few more multimillion dollar mansions.

Guess what sits all over the old Stapleton airport property in Denver now? A single noise lawsuit started all that. My office is in a warehouse that literally sits on the north end, dead center, of the old 35R. And the control tower is opening soon as a trendy bar.
 
I pay $400 and we have quite the list. Have had many cash offers that have all been declined. IT's insane in Florida. We looked at buying a small beach condo in southern Florida - man you cant get a hangar down there for 10 years.
 
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