Title
New Ground Lease with Custom Pipe & Fabrication, Inc. at Phoenix Sky Harbor International Airport (Ordinance S-52959) - District 8
Description
Request to authorize the City Manager or his designee to enter into a new ground lease with Custom Pipe & Fabrication, Inc. (Custom Pipe) for premises located at 149 S. 27th Street (Premises) for a term of three years with two one-year options to extend the term at the sole discretion of the Aviation Director.
Report
Summary
Custom Pipe wants to lease approximately 70,000 square feet of land located at 149 S. 27th St. to supplement storage space for its pipe fabrication business located on the adjacent Custom Pipe-owned land at 302 S. 28th Street.
Custom Pipe currently occupies the Premises under Unsubordinated Ground Lease No. 151989, which expired on April 28, 2026.
Contract Term
The primary term of the ground lease will be three years with two one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
Rent for the first year of the ground lease will be approximately $99,400 based on a rental rate of $1.42 per square foot per year. Rent will be adjusted annually according to the Phoenix-Mesa-Scottsdale Consumer Price Index or three percent, whichever is greater. Total anticipated revenue over the term of the ground lease will be approximately $497,000, if all options to extend the term are exercised.
Location
149 S. 27th Street
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Frank McCune and the Aviation Department.