The Metropolitan Washington Airports Authority Board of Directors voted at their September board meeting to approve the sale of 424 acres adjacent to Washington Dulles International Airport, known as the Western Lands, to Digital Realty, a global provider of data center, colocation and interconnection solutions, for $236.5 million.
The Western Lands are part of an 854-acre tract acquired by the Airports Authority between 2005 and 2007 to construct a fourth runway and additional facilities. After building the runway and support area, the Western Lands portion of the property has remained undeveloped. With no future airport uses envisioned for this undeveloped land, which lies along Virginia Route 606, the Airports Authority sought to lease or sell the 424 acres to realize a return on the earlier investment.
The money—just over $200 million after transaction costs—will be put into a special fund dedicated to controlling Dulles International’s cost per enplaned passenger in future years. Under federal laws and regulations, revenue from the sale can only be used by the Airports Authority for aeronautical purposes at Dulles International and cannot be transferred to other business areas, such as the Authority’s Silver Line Metrorail project or the Dulles Toll Road.
The cost per enplaned passenger is the amount airlines are charged by airports to cover the costs of operating the facility. It is a key metric that airlines use in selecting airports to serve in an increasingly competitive marketplace. Just a few years ago, Dulles International—because of debt incurred building new runways, parking decks, train systems, terminal additions and Customs areas—gave the airport one of the highest costs per enplaned passenger in the nation. In recent years, however, the Airports Authority has lowered this cost by one-third. The fund created with proceeds from the Western Lands sale will serve as a buffer against any future rising airport costs in the years ahead, helping strengthen Dulles International’s competitive position.
“The sale of the Western Lands will generate significant non-aeronautical revenue for the Airports Authority, which will be instrumental in our mission to continue to hold down the future cost per enplaned passenger at Dulles International,” said Airports Authority Executive Vice President and Chief Revenue Officer Jerome L. Davis, who led the sales effort. “The proceeds from this sale will further our revenue-enhancement and cost-control work to ensure that Dulles remains an attractive option for expanded air service by current and future airline partners.”
With Board of Directors approval, the sale will move toward closing. The final sale price of $236.5 million is reflective of the current real estate market in Loudoun County. Conditions of the transaction ensure that the land will be used for airport-compatible purposes and will comply with current zoning requirements to safeguard against any kinds of development—including residential—that might restrict the airport’s future growth potential.
“Using the proceeds from the Western Lands to hold down future costs for airlines at Dulles International fits well with the Airports Authority’s strategy of providing competitively priced facilities for air carriers and passengers in the National Capital Region,” said Airports Authority President and CEO Jack Potter. “The proceeds will be used in a way that will benefit everyone who uses Dulles International for years to come. We thank and congratulate the many people across the Airports Authority whose hard work and vision made this project possible.”
The Airports Authority enlisted real-estate consulting firm CBRE to market the Western Lands and handle details of the transaction.