Tesla Leases 1M sf in Alliance Industrial’s Kyle Logistics Park

Tesla is poised to take up the bulk of space in Alliance Industrial’s 1.4 million-square-foot Kyle 35 Logistics Park.

The electric car company, led by Elon Musk, plans to lease three of the five warehouses, totalling just under 1 million square feet, at the sprawling industrial site along I-35, just south of Austin, the Austin Business Journal reported.

Tesla will use the facilities for warehouse storage and light assembly, according to Kyle Mayor Travis Mitchell. The company could end up leasing the entire complex, still in development by Houston-based Alliance. The project will be the first spec industrial site with more than 1 million square feet in the booming megaregion between Austin and San Antonio.

Codenamed “Project Fire Engine Red,” it encompasses five logistics buildings ranging from 140,000 to 475,000 square feet, with clear heights between 36 and 40 feet. It’s likely to support the existing Tesla gigafactory about 33 miles north eastern Travis County, which employs over 12,000 workers.

Kyle and Hays County officials approved performance-based incentives with Alliance last year. Alliance will receive property tax reductions totaling more than $3 million under an agreement with Hays County. The Kyle agreement entails a 10-year tax rebate of 75 percent, worth nearly $5 million, the outlet said.

Tesla, which produced 479,700 vehicles last quarter, has become a major player in Austin-area real estate. With its existing headquarters, gigafactory and growing showroom network, the company now occupies a whopping 4.5 million square feet in the region.

—Quinn Donoghue