Google in deal with NASA for more space

By Eric Auchard

SAN FRANCISCO (Reuters) - Google has struck a deal to expand its office space by 50 percent by leasing land on a former naval air base turned space research center near its Silicon Valley headquarters.

The Internet leader and U.S. National Aeronautics and Space Administration said on Wednesday that Google can build on 42.2 acres at NASA's Ames Research Center in Mountain View, California, under a lease that could run up to 90 years.

The undeveloped land between Moffett Field, the Googleplex headquarters and the wetlands of San Francisco Bay gives Google room to build up to 1.2 million square feet (111,500 square meters) of offices and campus research facilities.

Under the terms of the lease, Google will pay NASA an initial base rent of $3.66 million per year, based on a fair market value assessment of the prime Silicon Valley real estate, the company and government agency said in a statement.

The deal makes Google the space research center's biggest tenant, a NASA spokesman said. The lease calls for periodic escalations in rent and has an initial term of 40 years, with options to renew at 10-year intervals, the parties said.

NASA plans to use the proceeds to help pay for maintenance and capital improvements at Ames, now a limited use air field that also is home to 40 tenants including 30 companies, six non-profits and several university campus extensions. The facilities stretch across 2,000 acres, the spokesman said.

NASA Ames spokesman Michael Mewhinney said Google's lease payments will help defray the $7 million cost of operating the air field and other facilities at Ames Research. Roughly $4 million already comes from other organizations leasing space.

To qualify to be a tenant on the land, organizations, both commercial and non-profit, must be involved in activities related to NASA's research agenda, which includes not just space, but biotechnology, nanotechnology and defense projects.

Tenancy "is not open to anyone off the street that says, 'Oh, I want some prime real estate in Silicon Valley at fair market value,'" Mewhinney said.

Moffett Field has been used for occasional flights by nearby military aerospace contractor Lockheed Martin, visits by government officials on Air Force One, and, in a minor local controversy, Google's top management.

Last year, Google co-founders Larry Page and Sergey Brin along with CEO Eric Schmidt reached a separate deal to pay $1.3 million a year to land their Boeing 767 plane and two smaller planes on the airstrip, according to a New York Times report. The deal was criticized as a sweetheart deal for billionaires.

Google plans construction on the new land in three phases, with the first stage to begin in September 2013, the second in 2018 and the third in 2022. NASA moved in after the U.S. government elected to shut down the Navy base there in 1994.

The land deal is part of a series of ties between Google and NASA that began nearly three years ago. The two organizations have announced agreements to work on a variety of projects ranging from space to mapping and disaster response.

(Editing by Braden Reddall)