Aviation Hangars Attract Investors as Soaring Demand Outpaces Supply

Written by:

Steve Marcinuk

Date:

30 Dec 2025

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The aviation development sector is experiencing a surge in demand as pilot shortages and rising aircraft ownership drive demand for storage facilities, creating opportunities for specialized real estate investors willing to navigate complex regulations and ground-lease structures.

Cary Goldberg, President of Diversified Companies, has shifted his family’s 45-year-old South Florida development firm toward aviation projects after identifying a significant gap between supply and demand for aircraft storage. The company now operates 52 units at North Perry Airport in Pembroke Pines and 42 units at Vero Beach, with expansion underway at Sanford Airport and other locations.

Understanding the Aviation Development Opportunity

The primary driver of demand in aviation real estate is the need to protect aircraft from environmental damage, especially in coastal areas. “You’re going to invest X dollars into an aircraft, even a small single-engine four-seater that you bought used for $100,000,” Goldberg says. “You put it outside and let that salt get on it – you’re done.”

This need for protection, combined with a nationwide pilot shortage and a growing flight-training industry, has created a market in which even older hangar facilities command premium rents. At Vero Beach, Goldberg notes the last new hangar project was completed 13 years ago, yet existing units rent for about $700 per month.

Building new hangars, however, comes with higher costs. “I’ve got to come in and just to be able to deliver it and try to build to an 11% yield,” Goldberg says. “I’m going to be at $1,100 to $1,200 a month. So I’m taking a risk, but I’m playing the demand factor to be greater than the sticker shock.”

Overcoming Development Barriers

Aviation development faces unique regulatory challenges that deter many would-be entrants. Projects must secure Federal Aviation Administration (FAA) approval in addition to the usual municipal permits, adding extra layers of review and complexity. Goldberg describes this as a barrier, but one his firm has learned to navigate through experience with the approval process.

The regulatory environment, while difficult, also limits competition for those who can succeed. “We’ve kind of figured out that secret sauce of getting through,” Goldberg says, referring to his firm’s expertise in moving projects forward where others might stall.

Ground lease structures are standard in the aviation sector, with airport authorities typically retaining land ownership and leasing development rights. Diversified Companies has developed expertise in negotiating maximum lease terms and understanding FAA requirements, generally seeking minimum 50-year ground leases to support financing and investment returns.

Investor Education and Market Positioning

Many investors are unfamiliar with aviation hangar assets and require education on the fundamentals of the sector. Goldberg compares aviation development to self-storage in its operations: mostly speculative construction, relatively simple management, and demand driven by individual ownership needs.

“The biggest challenge is the lack of new products,” he says. “We wouldn’t do this if there wasn’t demand. There’s tremendous demand – pilot shortage across the country, across the world, really.”

Investment returns typically start at 12% cash-on-cash yields, with annual rent increases of 3% to 5% built into lease agreements. The ground lease component may initially reduce cap rates by 25 to 50 basis points, but this effect diminishes over longer holding periods.

Diversified Companies targets investors, including family offices, trusts, and high-net-worth individuals, seeking longer-term capital deployment. Institutional funds, which often require faster liquidity, are less suited to the sector’s longer timelines. “The family office that is patient, trusts are fantastic,” Goldberg says, emphasizing the appeal to investors comfortable with holding periods of several decades.

Geographic Expansion Strategy

Although demand for hangar space is nationwide, Diversified Companies focuses on markets with site conditions similar to those in South Florida to maintain operational efficiency and control costs. The firm targets regions with familiar soil and climate, such as Texas markets from Austin to Dallas and select areas in Georgia and Arizona.

“Being a developer is such a hard thing already. It takes so long to get gratification on deals,” Goldberg says. “We want to go to easier places. Let’s go where we know those soil conditions, where we can put a site work budget together.”

This approach allows the company to leverage established relationships with architects, metal building suppliers, and general contractors, while relying on local engineers for market-specific requirements.

Operational Model and Amenities

Aviation hangars are relatively low-maintenance assets, often requiring only about 20 hours of on-site management per week. Diversified Companies has established a program to employ retired military personnel in these roles, fostering community connections and supporting veterans’ employment.

Unlike in many commercial properties, where amenities are underutilized, aviation hangar tenants value social spaces. “The guys don’t go out flying – they all sit out there and talk, they hang out,” Goldberg says. “Here they go and sit in their hangar, which they like to do. So we build an amenity center with air conditioning, pool table, card table, bathrooms – just something to give them a little different than what they’ve been used to.”

Diversified Portfolio Strategy

In addition to aviation, Diversified Companies remains active in multiple development sectors, including hospitality projects focused on youth sports complexes. The firm is developing Marriott TownPlace Suites properties adjacent to major youth sports facilities, aiming to create a seamless experience for traveling sports families.

“If I’m ever going to get into hospitality, I want to be able to provide something for a parent where they can park their car on Thursday or Friday when they show up, and they don’t have to get back in their car until they leave on Sunday or Monday,” Goldberg says.

This diversification strategy is designed to find underserved niches in real estate while maintaining efficiency through standardized processes and established vendor relationships.

Market Outlook

The aviation development sector is supported by ongoing demand for pilot training, rising aircraft ownership, and a limited pipeline of new hangar construction. The United States remains the world’s leading destination for flight training, with favorable weather and well-developed aviation infrastructure reinforcing long-term demand.

For investors seeking alternative real estate opportunities with defensive characteristics, aviation hangars offer stable fundamentals despite higher barriers to entry. The sector appeals to patient capital willing to navigate regulatory requirements in exchange for steady, growing cash flows in a market where supply chronically lags demand.

Success in this sector depends on understanding the specialized approval processes, ground lease structures, and operational requirements that distinguish aviation real estate from traditional commercial development. This expertise can create lasting competitive advantages for experienced developers in an emerging alternative asset class.