The site, which is popularly known as Son Fangos, is some 220'000 square metres in area and situated in Coll d'en Rebassa between Mercapalma and Carrefour.
This agreement will now be put to the Council of Majorca, who will have a maximum of six months to approve or reject the modification to Palma's General Town Plan.
De Santos said that the chosen site would be able to hold a total of 5'500 cars.
He added that for some time there had been talk of the siting of such a facility in Palma's Son Sant Joan airport, and this site is not far from the airport.
The council has been involved for some time now in a bitter dispute over the illegal occupation of land near the airport by car hire firms, who park their fleets there.
In Palma itself, the car hire firms cannot park their vehicles in the streets, and the use of the waste land in the airport area led to accusations of unfair competition.
De Santos also announced that Palma council had given initial approval to the Special Plan for Interior Reform (PERI) for the site in Son Busquets where it is planned to construct 1'662 homes, 852 of them being council houses, and a Primary Education Centre.