Call it space for space. Humankind’s rapid commercialization and militarization of the final frontier has spurred some lofty visions and now even loftier projections of economic impact, due in large part to leasing and development on terra firma.
The rapid increase in the number of annual launches — Vandenberg Space Force Base in Central California will launch a projected 100 rockets a year by 2025, for instance — and the growth in funding for satellites, celestial research and even space tourism have together created a greater need for new research facilities and offices for space-focused businesses. With roughly 222,000 people employed in the space sector in the U.S. alone, there are even opportunities in residential and retail.
Across a constellation of established and emerging launch sites, the expanding space industry requires physical space to grow: Startups focused on space raised $12.5 billion last year, and forecasts suggest 9 percent annual growth in the industry overall. Consultancy McKinsey & Company predicted in early 2023 that the space industry will be worth more than $1 trillion by the following decade. (It should be noted that the United States Space Force itself launched only in late 2019 as a branch of the U.S. Air Force, immediately becoming a source of business for real estate.)
Much of this maturation is tied intimately to the commercial space these companies occupy and plan to occupy.
“The space industry is in high growth mode,” said Tom Taylor, managing director of brokerage JLL (JLL)’s aerospace and defense business. “The strategy for a lot of these companies around how they’re going to grow and compete is their real estate strategy. It’s almost foundational.”
A recent deal involving the Baltimore-area operations of Houston-based Intuitive Machines highlights the growth’s relationship to real estate. The space exploration, infrastructure and services company originally leased 1,360 square feet in the area just three years ago. This spring, it finalized a short move to expand into a 21,117-square-foot research and development facility owned by St. John Properties. Intuitive Machines plans to double its 20-person employee count in the area by the end of next year.
The competition for specialized talent — and the premium placed on being near institutions of higher learning, research centers and launch sites — makes space industry real estate akin to technology and life sciences. Proximity to ideas, and the housing and lifestyle that workers want, is key. Long a center for the aeronautics industry, California competes against development opportunities and talent pools in Washington state, established infrastructure in Florida, and an aggressive push to court the space industry in Texas, especially around growing aerospace hubs in Dallas and Fort Worth. (Then there’s outliers such as the Baltimore-D.C. corridor.)
But the Golden State has a string of sites attracting attention and real estate development. California also says it brought in half of invested capital in the space industry between 2012 and 2022.
In Silicon Valley, a $2 billion co-development between the University of California at Berkeley and developer SKS Partners seeks to create a research campus adjacent to NASA’s existing Ames Research Center, a hub of agency innovation that boasts the world’s two largest wind tunnels. In El Segundo, one of the beach cities south of L.A., the Los Angeles Air Force Base has been reclassified as a Space Force Base, and a cluster of development has taken root alongside Long Beach Airport.
Overall, California officials estimate the growing space economy already generates $60 billion annually in economic activity.
For many communities, the push for growing the space economy is part of a race to create good-paying jobs and take advantage of existing aerospace and defense assets. Reach, an economic development group on California’s Central Coast in Santa Barbara County that formed in 2019 and that operates in a region that includes Vandenberg Space Force Base, believes space can shore up the economy. Sally Buffalo Taylor, Reach’s communications director, said that having Vandenberg in their backyard is the equivalent of being born on third base. They just need to work to bring it home.
In addition to the large engine that is Elon Musk’s SpaceX, which operates a launch site on the base, dozens of firms have clustered around it, following a 2021 blueprint for growing a commercial zone dedicated to the industry. The state awarded Relativity and Astra, tech firms that operate near the base, $400 million in state tax credits in 2022, with expectations that the companies would create 1,700 jobs. There’s also additional launch pads Vandenberg looks to lease out to commercial firms.
Taylor said other proposals call for the creation of a mission development zone on unused land within Vandenberg, which would lead to the development of offices, support buildings and maintenance sites on a greenfield site. Currently, federal authorities are reviewing the plan. There are also efforts to develop new sites around the local Santa Maria Airport to expand the aerospace industry footprint.
The rapid growth in and around the base has brought in 18,000 jobs overall, a boom which has put such strain on the region’s already constricted real estate market that Reach has spoken to U.S. Rep. Salud Carbajal and other local officials about speeding up housing production. Former Space Force Col. Robert Long told local officials last year that “workforce housing is probably the key issue confronting the base and our personnel, and ultimately influencing the pace of growth in the future.”
Further up the coast, UC-Berkeley and San Francisco-based investor and developer SKS Partners unveiled plans in October 2023 for Berkeley Space Center at NASA Research Park, a 36-acre research and development park adjacent to NASA’s Ames facility in an unincorporated part of Santa Clara County, home of Silicon Valley. Tim Smith, director of development and project management for SKS, says the combination of Berkeley’s intellectual heft, nearby venture capital dollars, and decades of federal investment makes this an ideal spot for a new kind of tech campus focused on providing the office, research and other commercial space to aid in the commercialization of space technology.
“There is this incredible amount of invested resources at NASA Ames — billions and billions of dollars of facilities and intellectual capital that really drives and has driven America’s leadership in aviation and space for decades,” Smith said. “We want to use that as the sort of center or the linchpin of this whole thing.”
The current design, covering at least 1.4 million square feet for up to 5,000 employees, calls for short, four-story workspaces, allowing for taller prototyping spaces and space for engineers and designers. There’s already a housing development in the works, and groundbreaking is expected in 2026.
Reach’s Taylor expects that as the space industry matures, more infrastructure, including launch sites and support structures for space tourism, will need to be built. The location and siting strategy around placement and gaining competitive advantage will be key. States like California, which already boast exceptional federal investment and infrastructure, have a significant lead, but more markets are poised to compete to be part of an industry as it lifts off. In particular, Texas and Florida aren’t shy about doling out incentives, including tax breaks, tax incentives and the creation of new research centers.
“A lot of these emerging space technologies will require infrastructure that doesn’t exist today, including manufacturing facilities, launch facilities, maintenance facilities and office space,” Smith said. “It’s so much broader than launch space.”
There’s the potential, then, for the sort of rise in real estate leasing, development and servicing currently seen within another sector that barely commanded anyone’s attention until the last few years.
“While AI is stealing the spotlight now, don’t discount the space industry,” Smith said.
CLARIFICATION: This article was updated to better reflect NASA and SKS Partners’s relationship to the Ames project.
