Commission authorizes negotiation, execution of Southwest cargo‑facility lease at AUS

The commission voted unanimously to authorize negotiation and execution of a ground lease with Southwest Airlines for space in the airport’s new East Cargo Building to house provisioning (in‑flight food and beverage) and cargo handling operations.

John Gallo, deputy chief for commercial development, described the lease as filling the last remaining vacancy in the East Cargo Building and said Southwest’s provisioning operation will approximately double the square footage of their current space. The authorization covers roughly 18,060 square feet of building space and about 13,418 square feet of cargo handling space for an initial five‑year term with one additional five‑year renewal option; the staff report referenced $33,083,038 in project‑level revenue and included an estimated first full‑year building rent figure (reported in discussion as $414,206.16).

Commissioner Fong asked whether the facility would be exclusive to Southwest; Gallo said the East Cargo Building is multi‑use (housing Amazon and Air General) and the current lease is for Southwest specifically, with any future Southwest‑specific facilities negotiated separately. When asked about rent escalations, Gallo said the building’s rental model includes annual escalations tied to debt‑service needs and not necessarily to CPI; exact escalation mechanics vary by lease.

Why it matters: filling cargo and provisioning space supports airline operations, can affect airport revenue and is tied to the airport’s capital and leasing strategy.

The commission approved the authorization following the presentation and discussion. Staff noted Southwest will pay ground rent during build‑out and begin paying full building rent after tenant improvements are complete.