When the U.S. government embarked on a plan to close scores of military bases during the 1990s, citizens and businesses across the country panicked. Newspapers printed doomsday scenarios including economic disaster, high unemployment and thousands of unused acres of real estate.

But just a few years after closings began, many of these military installations have become commercial havens, quickly turning bases from ghost towns into job factories.

As this formerly government-owned property hits the commercial real estate markets, the bases have become especially attractive for transportation firms, which often have great difficulty finding new facilities to meet their needs.

Kelly Air Force Base in San Antonio, Texas, is scheduled for closure this July. The base was put on the chopping block in 1995 but quickly began making the transition from government to commercial. The Greater Kelly Development Authority, which is responsible for redeveloping the base, has launched an extensive branding and marketing campaign to draw in new business.

"We've been in a transitional phase the last few years, assuming real estate as the Air Force moved out. Come July 13, we will inherit nearly 40 percent of Kelly's facilities," said Paul Roberson, executive director for the Greater Kelly Development Authority. "We have been incredibly successful bringing commercial aviation, and we know the (Defense Department) depots are anxious to locate commercial aviation companies in their immediate area also."

Kelly's assets include a gargantuan runway and millions of square feet of warehousing space, all close to transportation via road, rail and sea.

In the last five years, the Development Authority has landed more than 35 commercial tenants and created over 5,000 jobs, some of them with highly visible international firms such as Boeing, Lockheed Martin, Pratt & Whitney, Ryder Logistics and General Electric.

Kelly isn't the only success story out there. Loring Air Force Base in Limestone, Maine, closed in 1994. During the mid-90s, area population dropped 76 percent, while the unemployment rate shot up to 12 percent.

But now, almost 1,000 jobs have been created on the 8,700-acre base. What's more, are unemployment has dropped to under 4 percent.

When the Air Force vacated Loring, it left behind excellent facilities. These have now been filled by insurance and accounting firms, while the base golf course has been transformed into a country club.

On the opposite coast, Sacramento is booming after the closing of three defense department installations: Mather Air Force Base, McClellan Air Force Base and the Sacramento Army Depot.

All told, more than 20,000 jobs were lost with the base closings in the mid-90s.

Yet now, Mather Field has become a booming air-cargo hub. More than 50 companies have installed themselves at the former base, bringing with them 3,200 jobs. The Army Depot has been leased out to commercial tenants, and business leases have brought 2,500 jobs to McClellan field.

A cottage industry has sprung up for those with expertise in base redevelopment. These real estate and transportation gurus now travel from base to base, preaching the benefits of privatization.

At Kelly, at least, privatization seems to be a better alternative to the military life.

"We are optimistic about the future," Roberson said. "There is so much potential here that you can't help but think that Kelly's redevelopment is the city's springboard to global business."

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Published: April 13, 2001

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Lesley Hensell covers commercial real estate and financial issues for Realty Times. Based outside of Dallas, Lesley works with high-tech and real estate clients as an independent marketing and public relations consultant. She also writes for several publications, including the Dallas Morning News. E-mail Lesley at: lhensell@earthlink.net