Title
New Ground Lease for Exclusive Use Ramp Space for United Parcel Service, Inc. at Phoenix Sky Harbor International Airport (Ordinance S-52822) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a ground lease agreement (Lease) with United Parcel Services, Inc. (UPS) to lease approximately 46,000 square feet of exclusive-use ramp space for cargo processing in the South Air Cargo facility at Phoenix Sky Harbor International Airport (PHX). The term of the Lease will be five years with three, one-year options to extend the term at the sole discretion of the Aviation Director.
Report
Summary
Currently, UPS leases 47,385 square feet of cargo space in the South Air Cargo facility at PHX. To increase its cargo processing capacity, UPS exclusively uses trade fixtures installed by UPS on the South Air Cargo ramp for cargo operations. The Lease will provide UPS with approximately 46,000 square feet of exclusive ramp space around UPS’s trade fixtures for processing its cargo.
Contract Term
The Lease will begin on or about May 6, 2026, and will have a term of five years with three, one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
The first year's annual rent will be approximately $53,820 ($1.17 per square foot), plus applicable taxes. Rent will be adjusted annually based on the Phoenix-Mesa-Scottsdale Consumer Price Index or three percent, whichever is greater. Total revenue anticipated over the term of the Lease will be approximately $487,586, if all options to extend are exercised.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Frank McCune and the Aviation Department.