Investing in Space

Los Angeles approves a 20-year SpaceX lease for a Starship rocket facility in the city's port

Key Points
  • The Los Angeles City Council on Tuesday approved a SpaceX permit to lease 19 acres of land in the city's port.
  • SpaceX plans to build a new rocket factory to help develop and build its massive, next-generation rocket called Starship.
  • The lease will begin at $1.7 million a year and then grow on an annual basis, with SpaceX expected to pay $52.8 million over the full 20-year period.
VIDEO11:5111:51
Gap partners with ThredUp, SpaceX's valuation , Robinhood and deepfakes

The Los Angeles City Council on Tuesday approved a SpaceX permit to lease 19 acres of land in the Port of Los Angeles, where the company plans to build a major manufacturing facility.

The lease will begin at $1.7 million a year and then grow on an annual basis, with SpaceX expected to pay $52.8 million over the full 20-year period. The company may be able to offset those costs through $44.1 million in "tenant credits"  for improving the property.

SpaceX's new rocket factory will be for its massive, next-generation rocket called Starship. The rocket so far has been developed at SpaceX facilities in Texas and Florida. But the new location adds capacity for SpaceX within driving distance of its headquarters outside the Los Angeles International Airport, where the majority of the company's more than 6,000 employees work.

A SpaceX facility under construction in this aerial photograph taken in April 2018 above the Port of Los Angeles.
Bloomberg

In an outline of plans distributed by government officials, SpaceX's facility will include multiple buildings for manufacturing, such as a blacksmith shop and machining. Los Angeles officials say SpaceX's plan will refurbish "dilapidated facilities with a history of vacancy and vandalism" and "has the potential to create 130 aerospace jobs."

SpaceX CFO Bret Johnsen told L.A. City Councilman Joe Buscaino a month ago that the company wanted to see how quickly a new agreement could be drawn up. The facility itself would be a large tent-like structure, similar to those used when Tesla was ramping production of its cars in recent years.

"They want to be up and running within the next 90 days," Buscaino told CNBC in January.

SpaceX's first Starship prototype under construction near Boca Chica, Texas in 2019.
SpaceX

The port location provides SpaceX with immediate access to water, key to transporting its immense rocket from a production facility to launch sites in either Texas or Florida. SpaceX currently moves Falcon 9 rockets across the highway on super long trucks, but Starship and its "Super Heavy" booster would be too large to transport on the road.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.