When Clay Paslay launched Paslay Management Group 16 years ago, he was helping airport executives around the U.S. manage their large capital improvement programs. It’s an area he knows well, having planned and developed capital infrastructure at Dallas/Fort Worth International Airport for 25 years. But last year, Paslay saw an even larger opportunity: working with airports and cities to develop the unused land inside and outside small, medium and large airports across the country.

The result was a new development division led by president John Terrell, a former airport executive himself, as well as former mayor of the city of Southlake, Texas, north of Fort Worth. “We are working with airports throughout the country helping them envision the commercial development plan for their non-aeronautical land and/or even doing development to actually develop assets on their airports,” said Paslay.

Paslay Group is capitalizing on a little-known opportunity. Airports offer prime development sites for several reasons, not the least of which is the availability of large parcels of unused land. When most airports were created, cities acquired extra land to use as a buffer for residential communities and as mandated by FAA regulations for flight paths. The land inside airport operating grounds is prime for development, including terminal space. The land outside the actual operating boundary can be built out more like traditional private development with major commercial uses, excluding residential.

As an example, DFW International Airport occupies 18,000 acres, and 12,000 are dedicated to actual airport operations. As vice president of commercial development at DFW International Airport, Terrell helped build 46 million square feet of retail, car dealerships, hotels and industrial space on 4,000 of the remaining 6,000 acres.

Initially, Paslay Group’s development division focused on Texas, which has more than 300 airports, but now it also has projects underway in Omaha, Nebraska; Nashville, Tennessee; and Fort Myers, Florida.

In many ways, the pandemic accelerated the development division. “There has always been an underlying desire at most airports to find ways to generate non-airline revenues,” said Paslay, “but clearly, when the pandemic occurred and the passenger count basically went to zero but yet the bills kept coming through the door for the airports, that just heightened the focus on how could they generate additional revenues that are not airline and passenger dependent. Airports are really focused on that now, and an objective of theirs going forward is to develop as many non-airline passenger-dependent revenues as they can.”

Because airports are predominantly owned by cities, Paslay Group focuses on connecting airports more closely with nearby communities. “More and more, cities are recognizing that the airport is an economic driver,” said Terrell. Federal regulations require that airport revenue cannot be diverted to the city that owns the airport, he noted, “but commercial development generates another revenue stream beyond just the leases and dollars to the airport. It also generates tax revenues from sales taxes, hotel occupancy taxes and property taxes that can flow off the airport to the city so it can generate a direct revenue benefit to the city that hasn’t really been recognized in the past.”

Paslay Group is casting a wide net to work with airports of all size, but some of the best opportunities lie with smaller airports that have close ties to their communities. “There are just not many people on the private side that are willing to work with a lot of these smaller and midsize airports because that is not where the giant piles of gold are. But it is a niche that can be profitable,” said Terrell. “Typically, the airports are located in business-centric areas, and they generate a certain type of population there that can warrant the restaurants inside terminals and other kinds of commercial development on the airport.”

Not Your Typical Development Process

The business of helping airports is highly specialized, and Paslay Group’s work directly with airport executives and with community leadership requires a certain skill set. “Our experience allows us as a company to put on the hats of each one of the entities that we are working with,” said Terrell. “We have a really strong understanding companywide of what the [Federal Aviation Administration] rules and regulations are because you don’t just go out and start developing; you have to be able to understand it well enough to communicate it to both the city and the airport so they also understand it is not like private sector development off the airport.”

For Southlake, Texas, Terrell has served not only as mayor but also as planning and zoning commissioner, so he has an ingrained municipal leadership view, as well. “Having the elected official hat in planning and zoning, you can also see and understand what is important to those municipalities, to those airports, and be able to communicate with them in a way that shows them how development of an airport can benefit them from their perspective. Each one is a little bit different, but when you have that kind of experience, it allows you to put yourself in their shoes and help explain it to them,” said Terrell.

Paslay Group also is working with M2G Ventures on several developments. The joint venture ensures an understanding if individual markets, as well as airport and community needs. M2G was founded by twin sisters to revitalize historic buildings and retail in the Fort Worth market, focusing on adaptive reuse of mixed-use districts. It also handles ground-up and urban industrial development. It has more than $1 billion of projects in its pipeline and has been at the forefront of several high-profile developments, including the transformation of Mule Alley in the historic Fort Worth Stockyards.

Creative retail opportunities at airports form a major focus for Paslay Group. Terrell draws parallels to early career experience as Western regional head of Union Pacific Railroad, transforming former train stations into retail centers, including The Gateway in Salt Lake City. In Mineral Wells, Texas, pictured above, the firm also is working with movie studios that see the historic Texas city as a great venue for filming. “You can change railyards into something very creative,” he said, “and you can change airports into something very creative, as well.”