Arlington advances plans to host eSpace manufacturing campus at municipal airport

Arlington staff asked the City Council to consider a set of agreements that would enable eSpace (also styled Eastpace in staff materials) to construct a major manufacturing and hanger complex on the west side of Arlington Municipal Airport.

Lindsay Mitchell, the city irector of strategic initiatives, told the council the project has been under development for 18 months and that eSpace moved its North American headquarters to Arlington in October 2024. The proposal brought forward five linked actions: a development agreement, manufacturing-facility and hanger leases, a performance agreement, an initial construction package with the CMAR Moss and Associates, and contract modifications for project-management and architectural firms. The Economic Development Corporation (EDC) would provide up to $115,000,000 toward defined project costs and intends to sell about $70,000,000 in revenue bonds to fund vertical costs, with the remainder covered from cash on hand, the presentation said.

Mitchell described Phase 1 as about 480,000 square feet of factory space (the original concept contemplated three phases and roughly 750,000 square feet total). Staff said eSpace has met master-agreement milestones: moved headquarters here, demonstrated required start-up spend, met revenue and capital-raise thresholds earlier in the development timeline, and is now seeking approval to proceed into site work and vertical construction.

Key financial and contractual terms flagged to the council included: 30-year triple-net leases for the manufacturing facility and hanger (each with two five-year renewals), a base rent starting at $9 per square foot with periodic escalations, a requirement that eSpace provide proof of additional funding and capital raises before leases are executed (including $50,000,000 in additional revenues and $50,000,000 in capital raise beyond amounts previously documented), a six-month security deposit, letters of credit covering two years of lease payments (accessible to the EDC on default), and a UCC lien on manufacturing equipment to protect the EDC in insolvency or breach scenarios.

The performance agreement ties incentives to job creation and other commitments: eSpace must fill 400 jobs in the first five years and 700 jobs over seven years with an average salary target of $95,000; the city would provide certain business personal property and leasehold tax rebates and a quarter-cent sales tax rebate on sales beyond a $100,000 annual threshold. Staff estimated the total project cost at $115,000,000 with eSpace contributing about $100,000,000 in tenant improvements. The EDC—inancial advisor projected annual level payments on the bond package of about $5.3 million using a conservative 6.5% interest rate.

Mayor Jim Ross and other council members praised staff for the work with eSpace and the potential economic benefits to Arlington. Council members asked clarifying questions about lease protections and default remedies; staff highlighted cross-default and incentive-recapture provisions, letters of credit and UCC protections. Mitchell said the EDC had approved the package the previous week and that the items would appear on the evening agenda for council consideration.

If approved, staff said ground-breaking for the site work was slated for early September and vertical construction documents would follow with a project completion target in 2027. No final vote on the council-floor approvals is recorded in the afternoon work session transcript; the presentation framed the council ctions as advancing the project to the construction phase.