While the recession has slowed new hangar development at the Bend Municipal Airport, the company with plans to build 73 hangars says interest remains strong.

Aero Facilities’ first hangar, a 10,000-square-foot building, will be owned by a Santa Barbara, Calif.-based businessman. The unnamed businessman will lease the ground from the city of Bend, said Kerry O’Neal, sales and marketing manager for Aero Facilities LLC.

The company has four other hangars planned for construction this summer. All were purchased by out-of-town buyers, O’Neal said.

“Most of our interest has been from out of the area,” said O’Neal, who has spent most of his nine years in Bend as a real estate developer before he became a partner in Aero Facilities. The company was selected by the city of Bend in December 2006 as the master developer of both the hangar project and a future phased industrial project at the airport.

“The biggest impact is who we are bringing to the area. They are high net-worth individuals with businesses,” he said. “It is going to be a positive impact on the city of Bend.”

Bend’s airport is one of the single largest economic drivers in Central Oregon with an estimated annual economic impact of $578.5 million, according to a 2007 report released by the Oregon Department of Aviation. The airport is home to several aviation companies and manufacturers, including Wichita, Kan.-based Cessna Aircraft Co.

But a decline in airplane sales has fueled layoffs at Cessna, which has trimmed its staff at the Bend plant by roughly two-thirds since November, from 450 workers to 165.

The layoffs have no direct impact on hangar sales because most people who buy hangar space own planes already, O’Neal said.

“We are hoping to bring new people here who buy houses here and who also may bring businesses here,” he said. “The biggest impact of the economy on hangar sales has been a lot of people are more hesitant to purchase a hangar.”

They are waiting on the economy before they decide to purchase a new hangar, he said.

The $24 million hangar construction project, which represents the combined retail value of all 73 hangars once they are constructed, is the first of two phases that Aero Facilities will build on the east side of the airport.

A second phase, which would be located on a 24-acre piece of property between the existing Cessna and Epic Aircraft buildings, would be started after the market rebounds and more hangars are sold, O’Neal said.

The project would include industrial space for aviation-related businesses, he said.

O’Neal answered the following questions by e-mail:

Q: Please describe your business.

A: Aero Facilities was formed to develop the hangar community requested by the city of Bend on the east side of the Bend Airport.

We bring together a mix of partners with many years of experience in both aviation and real estate development. In the current phase of our project, we will deliver 73 aviation storage hangars within a planned 23.6-acre hangar community.

Q: What are the potential hangar opportunities at the airport?

A: We currently represent all of the new hangar inventory being brought online (at the Bend airport) right now. The city-owned hangars are currently at capacity and tie-down space is becoming harder to come by. The second phase of our project will be focused on the aviation business community with special attention to light industrial manufacturing.

Q: So far, has the demand for new hangars been as expected? If not, what are the repercussions?

A: Absorption is a bit slower than expected. Lots of people are interested, but are watching to see how the economy will shape up. We are just beginning the (building) construction phase of the project by delivering the first of our presales. Many were waiting to see if our project would be stalled by the economy, which it has not been. We are in the middle of construction on our first 10,000 square foot hangar, and have requested permits on the next four units to be delivered this summer.

Even as late as last summer, when the economy really started to falter, the need for more hangar space was strong. Today, all of the available outdoor tie-down parking is full, and some owners are forced to keep their planes in Redmond, Prineville or Sunriver, awaiting the availability of hangars in Bend. The long-term prospects for this project are good.

Q: What are the sizes and prices of hangar space that will be developed at the Bend Airport?

A: We still have availability in each of our five size-classes of hangars. Prices start at $99,000 for a T-hangar and go up to $1.175 (million) for the largest and most expensive executive hangar. We currently offer options in floor heating, office build-outs, lighting, and more.

Q: What has been the impact of the global recession on corporate travel? What is the impact locally?

A: We do not expect people to immediately start flying more, but as business picks back up and people have the money and need to fly, well-priced aircraft will allow more folks to enter the market. As (commercial) airline service continues to have difficulties, and as Bend continues its growth, the hangar project will move forward, and when the economy picks up, we should begin to fill out the entire 20 acres. Even in this economic climate, private and business aircraft make sense for a lot of people. We just want to make sure that those people have the resources they need to locate here in Bend.