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The rapid increases in building costs came to a head after the Covid-19 pandemic hit in early 2020, making it very costly to construct or redesign concessions, Gluck adds. “Are costs out of control? I’m not sure they were ever under control,” he says. “It’s simply that they’ve increased beyond a level that previously allowed airports to have unlimited expectations of what concessionaires can do.” SmartDesign Group’s Baker believes it’s an understatement to say that costs have gotten out of control. “Our industry has some of the most expensive real estate in the world, and this combined with rising costs of labor, goods and construction—it’s not a sustainable economic model,” he says. “Due to the complex protocols and processes put in place by airports, municipalities and port authorities, it’s become virtually impossible for new contractors to enter the market, which has resulted in a lack of competition and in some cases monopolization within certain regions,” Baker adds. “There’s no doubt our industry is uniquely complicated and construction carries a whole load of

processing and protocols; however, I don’t believe it should result in escalated costs of 60 percent to 70 percent and sometimes 100 percent more than the street.” Although extreme increases in construction costs, especially since 2020, are undeniable, Populous’s Ax has seen some improvement recently. “Both labor and material shortages are improving, and over the past 12 months, both airports and their tenants are becoming more cost conscious and have reduced the urgency to build, even as passenger volumes are seeing reasonable growth percentage since the end of the pandemic,” he says. Gluck notes that the airports he works with are trying to be more reasonable with their asks in buildout to help rein in costs. “For example, rather than setting a minimum spend, they set design standards and have a system to review drawings and plans and to monitor the construction to ensure that standards are met,” he says. “These airports no longer have a clause in concession leases saying, ‘If you don’t spend a certain amount per square foot or total you must pay the difference to the airport.’ It rewards efficiency in design and construction as long as the concessionaires meet the airport’s design standards.” Gluck also believes that at some point costs will plateau. “Because beyond that point, it’s not cost-effective to design or build to a higher standard,” he says. While Baker believes more effort to help rein in construction costs needs to come

from landlords, he also details certain ways designers can lower costs. “When designing a new terminal or concourse, our team always puts infrastructure and logistics as a priority,” he says. “This results in lower capital expenditure for tenants and more rent to landlords, so it’s a real win-win solution. “Additionally, modular and prefabricated concepts that can be constructed off-site and assembled on-site will become more and more popular in the industry,” Baker adds. “The less time spent within the terminal reduces capital expenditure significantly and proves to be more productive in terms of a fast-track approach to scheduling.” For example, Baker adds, SmartDesign Group created a food truck concept in Oslo Airport (OSL) where the trucks were constructed off-site and then craned into position in the terminal. “The entire process from contract award to installation and operation was completed within eight months,” he says. What’s Next? When it comes to the future of airport design, more technology seems to be the most obvious evolution on the horizon. “Artificial intelligence (AI) might positively impact store design once it learns the basics, as AI should streamline planning efforts and, at the minimum, get the design started by providing a ‘strawman’ that human designers can flesh out,” Gluck says. “And if the design process is more efficient, the costs of building stores may decrease, at least somewhat.” Gensler’s Osbaugh points out that terminals are already starting to embrace what he calls the “ Amazon effect,” meaning the ability to get anything at any time. “Pre-ordering any service, from food to parking, is becoming more prevalent,” he says. “The next evolution is going to be bundling the air travel component with the mode of travel to your home. That could be a traditional vehicle, or it could soon be an autonomous flying vehicle. “As a premium passenger, the entire journey could be a single ticket where you’re taken care of from door to door via the airline instead of having multiple vendors controlling your journey,” Osbaugh adds. Stantec’s Fereidooni also sees a move to concessions that work more like Amazon coming soon, and foresees COP 28 and other sustainability regulations compelling airports to become more sustainable, with the ultimate goal of net-zero construction and operations.

Below: One way that SmartDesign Group attempts to rein in the enormous cost of constructing in an airport is to use off-site construction strategies. For example, the group created a food truck concept in Oslo Airport where trucks were constructed off-site and then craned into position in the terminal.

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AX NEWS JANUARY/FEBRUARY 2024