CHARLESTON, South Carolina (Reuters) - Boeing Co (BA.N) has signed a deal allowing it to buy nearly 1,100 acres of land at the site of its 787 jet factory in South Carolina, a deal that gives it room to expand production.
The acquisition gives Boeing the option to buy the land its factory currently sits on, and the deal could eventually allow Boeing to quadruple its footprint in the area, its first commercial airplane manufacturing site outside of Washington state.
However, some of the land is swamp that Boeing would need to fill in to develop, officials said. Also, one section contains a radar installation for the Charleston airport that Boeing would need to move to develop that land. Boeing also has not yet obtained a firm price for the purchase.
Boeing said it is not looking to expand in the near future. The purchase “makes sense to protect any future growth plans the company may have,” a spokesman said. He declined to comment on the difficulty in developing the land because there are no such plans.
The agreement signed Wednesday would provide Boeing about 320 acres next to its factory and grants the Chicago-based company the option to buy 750 more acres in several parcels adjacent to and including the 260 acres that its 787 Dreamliner final assembly plant sits on, said Chip Limehouse, chairman of the Charleston County Aviation Authority, which oversees the local airport.
The sale of the first parcel will close later this year, Limehouse said. If Boeing exercises its buy option, it will acquire just under 1,100 acres. Boeing’s current campus is owned by the aviation authority, which runs Charleston International Airport, and is leased by Boeing for $1 a year, he said.
The aviation authority said it has been told Boeing will exercise its option to buy the land its current campus and plant sits on in 2025 when the incentives that the state gave to Boeing when it came to South Carolina run out.
Boeing’s $1-a-year lease on the property runs out in 2021, said Becky Beaman, aviation authority spokeswoman, but there is a four-year extension option built into the lease that Boeing will take.
The value of the additional land, which is also owned by the aviation authority, is yet to be determined, Limehouse said. He said the land is probably worth about $18 million to $20 million.
The price is “a good question,” Limehouse said. “Some of it’s very low and it’s very expensive to fill. Most of it is wooded and a lot of it is low. Part of it has a radar system (for the airport) on it that they will have to get FAA permission to move and it could be expensive.”
South Carolina has strict wetlands protection laws, but, Limehouse said the wetlands on Boeing’s new land are interior wetlands that do not flow into any river “and those are easier to permit for fill.”
The aviation authority and Boeing have been working on the land sale for 2 1/2 years, he said, as the sides first agreed on the parcels and then the matter required board approval.
Boeing’s plans for the land were not immediately clear. Limehouse said the company had indicated plans to use the property, but that it had not shared any details.
“When we ask them what their plans are for the property, they always tell us ‘We’re not buying it to land-bank’ and ‘We build airplanes,'” Limehouse said.
But the purchase was hailed as a further sign of growing aerospace investment in the region.
“This is great news. It means Boeing is healthy and will certainly have more jobs for the future,” Limehouse said. “We see the airport as an economic development engine.” (Reporting by Harriet McLeod in Charleston, South Carolina. Editing by Alwyn Scott and Bob Burgdorfer)