UPS, King County near deal for $100M Boeing Field cargo facility, long

Jan 05, 2024

Courier giant United Parcel Service is in advanced talks with King County to sign a long-term lease and build a new air cargo handling and flight control facility at King County International Airport-Boeing Field, involving investments worth more than $100 million, the Business Journal has learned.

If approved by the County Council and the Atlanta-based global shipping and logistics conglomerate, the agreement will include a new 20-year airport lease, plus three five-year options that together could extend the lease another 15 years, according to interviews and documents.

"It is a very significant investment that they’re talking about. They've briefed us and it's slightly north of $100 million in terms of the planned investments," Boeing Field Director John Parrott told the Business Journal, confirming that talks are underway. UPS is "looking to establish themselves as a long-term tenant going into the future," he said.

"UPS has been operating on a month-to-month basis for about 25 years and they finally decided they needed to upgrade and update their facility and make it more efficient, and so they’re looking for a 20-year lease, with possibility of a couple of extensions," Parrott said.

The agreement will require UPS to demolish the current rented facilities and build a state-of-the-art cargo handling facility worth at least $37 million. It also requires the cargo company to build an improved ramp area for aircraft parking worth an additional $1.8 million.

The proposed lease would include 564,000 square feet of space located at 7277 Perimeter Road S.; 18,910 square feet of gross building area in the 7300 Building; and an additional 238,191 square feet for aircraft parking, documents show.

The deal requires the demolishing the current structures on the 18-acre parcel of airport property to make way for the new facility. The project proposes a five-building campus, including a main air cargo and package sorting building, a flight control building, a caster deck and canopy building, a maintenance building, a security building and parking for up to five widebody jet aircraft, internal King County memos show.

The location is one of Boeing Field's most desirable areas; no other parcel on the east side of the airfield offers comparable depth and distance from the main runway, allowing parking.

Under the proposal, UPS is not only required to significantly invest in the buildings on the property, it must also pay an initial base rent of $89,000 per month for the first three years, an amount equal to $1.07 million annually.

In the fourth year, the rent rises to $144,290 a month, for $1.73 million a year. Then in the fifth year and for every five years afterwards, King County would adjust the monthly rent based on the property's market value.

Rent to be paid to King County is separate from the estimated $100 million project cost of the UPS facility, Parrott said.

UPS would construct the aircraft ramp parking area improvements as part of its lease improvements in exchange for exclusive use of the area until 2024, allowing UPS to amortize its investment in those improvements. After 2024, the space won't be part of the leased premises.

At the end of the lease, all leasehold and building improvements would revert King County's ownership and the proposed redevelopment could potentially be used for long-term air cargo, combination air cargo and general aviation uses.

As an airline user of Boeing Field, UPS will also pay additional monthly landing fees, fuel and aircraft parking fees. UPS employs 5,000 employees in the Seattle area, and hires extra workers during peak holiday periods.

If the deal goes ahead, the new Boeing Field air cargo and package sorting facility would join a $100 million expansion facility in Tacoma that opened last year.

King County staff said the UPS project at Boeing Field would "position the airport to capture its full economic value" and "support economic vitality in the region," two major goals of the county.

The King County Council has been aware of the talks with UPS since Dec. 11, when Executive Dow Constantine shared a copy of the proposed lease with members.

They have since held one discussion about the investment project and lease, and another is slated for later this week, Parrott said.

"In all likelihood it will accommodate, although probably not cause, increased activity at the airport and it will tie up a significant chunk of airport property for a number of years," Parrott said. "And because we are so constrained on property, that was something that council had some concerns about so we’ll talk some more about it."

In a staff memo about the project, King County officials highlighted that UPS pays good wages and benefits and highlighted other community considerations and partnerships.

"UPS is used by Amazon and other local businesses to transport goods. A permanent facility at KCIA will help the airport's total positive economic impact within the Puget Sound region and Washington state as it will contribute to more than $3.5 billion in direct and indirect economic activity, wages and benefits, sale of goods and services, and tax revenues," the memo stated.

UPS is also a major purchaser of Boeing cargo jets.

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