Understanding Airport Hangar & Aviation Building Appraisals

What is an Airport Hangar & Aviation Building Appraisal?

An airport hangar or aviation building appraisal determines the market value of leasehold interests in structures located on leased airport land. Unlike freehold properties, these appraisals include the value of the leasehold interest held by the client, along with the improvements such as the hangar or aviation facility.

These appraisals are essential for financing, buying, selling, lease renewals, taxation, investment analysis, and legal matters related to aviation infrastructure.

Key Factors in Airport Hangar & Aviation Building Appraisals

• Lease Terms & Conditions – Length of lease, renewal options, ground rent, and transferability impact valuation.

• Leasehold Interest Value – Assesses the financial benefit of the remaining lease term to the client.

• Land Ownership & Governance – Whether the land is controlled by Transport Canada, a municipal airport authority, or First Nations affects marketability and restrictions.

• Building Type & Use – Includes private, corporate, and commercial hangars, aircraft maintenance facilities, and storage buildings.

• Market Demand & Aviation Traffic – Proximity to major hubs, regional airports, flight schools, and charter services affects desirability.

• Comparable Lease Sales – Adjustments for lease length, location within the airport, and access to runways or taxiways.

• Hangar Size & Infrastructure – Door clearances, heating, insulation, fire suppression, office space, and specialized aviation systems.

• Zoning & Airport Regulations – Compliance with aviation use restrictions, height limits, and safety clearances.

Approaches to Value in Airport Hangar & Aviation Building Appraisals

1. Income Approach (Capitalization of Leasehold Interest) – Primary Method

   • Determines the value of the leasehold interest based on its ability to generate income or provide cost savings.

   • Evaluates rental income potential, lease rates, ground rent obligations, and airport fees.

   • If the hangar is not currently leased, it is assumed to be at market lease rates.

2. Direct Comparison Approach (Used for Private & Commercial Hangars)

   • Compares the subject leasehold to recent sales of similar hangars or aviation buildings at the same or comparable airports.

   • Adjustments made for size, lease terms, location, and amenities.

3. Cost Approach (Used for New or Purpose-Built Hangars)

   • Values the replacement cost of the hangar and improvements, minus depreciation.

   • Often applied to newer or custom-built aviation facilities.

When is an Airport Hangar Appraisal Needed?

• For Mortgage Financing & Refinancing – Required by lenders to assess loan security based on leasehold interest and improvements.

• For Buying or Selling a Hangar or Aviation Facility – Establishes fair market value, including the leasehold interest.

• For Lease Renewals & Rent Reviews – Helps determine whether lease payments reflect market conditions.

• For Tax Assessments & Appeals – Ensures accurate municipal taxation of leasehold improvements.

• For Business Valuation & Investment Planning – Supports aviation business owners in financial decision-making.

• For Legal & Estate Settlements – Used in disputes, estate transfers, and expropriation cases.

What is Included in an Airport Hangar & Aviation Building Appraisal?

• Lease Agreement Review – Terms, renewal conditions, ground rent structure, and restrictions.

• Value of Leasehold Interest – Financial benefit of the remaining lease term to the client.

• Comparable Market Lease Sales – Adjusted sales data for similar hangars or aviation buildings.

• Building & Site Condition Analysis – Construction quality, insulation, heating, security, and infrastructure.

• Runway & Taxiway Access – Evaluates the ease of aircraft movement and operational efficiency.

• Final Market Value Estimate – Professional assessment based on leasehold terms, market demand, and aviation infrastructure.

What is NOT Included in an Airport Hangar Appraisal?

• Ownership of the Land – The appraisal values only the leasehold interest and improvements, not the underlying freehold land.

• Aircraft & Equipment – Planes, avionics, fueling systems, and ground support equipment are excluded.

• Speculative Lease Rate Changes – The appraisal does not predict future lease terms or policy changes.

Why is an Airport Hangar Appraisal Important?

• Ensures Accurate Leasehold Valuation – Accounts for the financial benefit of the lease and improvements.

• Supports Financing & Investment Decisions – Helps buyers, sellers, and lenders assess aviation property value.

• Helps Negotiate Fair Lease Terms – Provides leverage for lease renewals and rent reviews.

• Aids in Tax & Legal Matters – Prevents over-taxation and supports leasehold disputes.

A professionally conducted airport hangar appraisal ensures fair, transparent, and aviation-specific valuations, supporting informed decision-making for pilots, aviation businesses, and investors.