Ryan Luetzow wants to give away his 100-foot by 120-foot hangar at Milwaukee Mitchell International Airport (KMKE) in Wisconsin.
What’s the catch?
According to Luetzow’s ad on Facebook Marketplace, “Take over our lease and its yours.”
And that lease is $3,300 per month for 12 months.
According to a recent Milwaukee Journal Sentinel article, Luetzow, who is not a pilot, has “been trying to sell the hangar for about six years.”
“The lease is what’s scaring potential buyers away,” the article explained. “Around six years ago, Milwaukee Mitchell International Airport shortened hangar leases in the northwest quadrant from five years with a five-year extension to just 12 months.
“Luetzow said he paid around $6,000 per year under his old 10-year lease, which expired this fall. The new one-year lease would charge him $36,000, and that doesn’t include property taxes.”
From $500 to $3,000-plus per month is a pretty hefty increase.
The airport is owned by Milwaukee County and it has wanted to redevelop the northeast quadrant of the airport for a long time now.
“For years, Milwaukee Mitchell has searched for consulting companies to help it draft a redevelopment plan for the northeast quadrant,” the Milwaukee Journal Sentinel article noted. “But what this would look like isn’t clear — the deadline for its most recent request passed in August with no bidders.”
So airport managers have shortened the length of hangar leases and raised the price to allow for flexibility.
“Because the search for partners is ongoing, the airport has not yet created a specific timeline for redevelopment,” according to a quote from Milwaukee Mitchell public affairs director Harold Mester in the Milwaukee Journal Sentinel article.
It is no secret that hangars are in short supply all around the country.
So the fact that a hangar owner can’t give away his hangar speaks to a larger issue. The underlying agreement upon which this hangar exists must be flawed or outside of reasonable market rates.
In any given week, I receive three to five unsolicited calls asking if I’m interested in accepting an offer for my home. My standard reply is, “As long as that offer is no less than $10 million.” The caller usually hangs up immediately. A few pause, then ask if I have another property for sale. Then they hang up when I say “no.”
Humorously, as I was working on this column, a realtor called to ask this very question. Sadly, he didn’t accept my $10 million sale price.
My home’s value is nowhere near $10 million, which is why no caller has bought it. The price I’m demanding makes no sense given its location, amenities, age, style, and any number of other reasons. If I wanted to sell, then a reasonable price would have buyers pounding down my door.
Wouldn’t it make more sense for KMKE management to reinstate five- to 10-year leases at reasonable, market rates and include a redevelopment buyout clause?
That way, when the airport has a redevelopment partner in place, and a plan with that partner, the issue of current tenants is already sorted out. And if redevelopment is five or 10 — or more — years out, the current tenants can continue reasonable use of their facilities.
Then maybe a current tenant can actually sell his hangar as opposed to struggling to give it away.
It sounds like he built a hangar on a land lease contract. These routinely provide at the end of the contract term ownership of improvements revert to the land owner. In this case, the airport. Under the original lease he would have paid only for the land use. Now as the airport is the owner they want market rate. 28 cents per foot is probably not out of line.
Hey Michael,
The rate went from 62.5 to around $2.42 per sq foot. That is not reasonable. It is not reasonable to charge tenant rent for using their own building.
I am another tenant at MKE. The new rent schedule has 3 tiers. The charge per square foot increases as the building size grows. My annual cost has increased, too, but it is still tolerable. I am trying to stay as long as I can.
I do feel bad for Ryan. I hope he finds a buyer who is an active aviator.