Kilroy Realty Corporation (NYSE: KRC) today said it plans to develop up to a 400,000 square-foot, 27-story office tower in the heart of San Francisco’s highly desirable South of Market financial district, adapting the company’s signature collaborative workspace concepts to a high-rise office environment.
The company said it has acquired a 0.43 acre, fully entitled development site at 350 Mission Street, a premier location situated at the main entrance of the City’s new transit station for approximately $52 million. KRC expects to invest an additional $200 million developing a high-image glass office tower with floor-to-ceiling windows providing abundant natural light, column-free floor plates offering open-office high-ceiling layouts, and ultra-energy-efficient operating systems—all qualities that are sought after by today’s modern office user.
The Skidmore, Owings & Merrill LLP (SOM) design focuses on the creation of an urban living room that is highly engaged with the City’s urban realm animated by a café, a restaurant, and a digital canvas. It reflects state-of-the-art sustainability practices and energy-usage standards which are targeted to earn the building LEED Platinum certification—the first ground-up commercial development property in San Francisco to do so. The design utilizes numerous innovative technologies with the aim of creating a building with a carbon footprint that will be as close to zero as possible. According to Craig Hartman, FAIA, SOM’s Design Partner, this will be one of the most innovative office use towers in the U.S.
Situated at the corner of Mission and Fremont Streets and immediately across the street from the new Transbay Transit Center, the office tower will offer the convenience, high visibility and urban amenities that are attractive to the city’s technology and media companies as well as traditional space users. KRC said it will heighten the impact of the building’s prominent location with a 50-foot, open air entry lobby featuring a 75x40 foot electronic media display wall—the first of its kind in San Francisco. The new building—designed with a side-core configuration, an all-concrete structure and an under-floor air distribution system—will accommodate the high-density usage and flexible and open interiors preferred by knowledge-based, collaborative workforces. In-building amenities include electric vehicle charging stations, a fitness center with showers and lockers, and a first-class bicycle and storage center.
“It is rare that you get the opportunity to build from scratch a cutting-edge urban work environment in one of the nation’s hottest office markets at a cost-basis that makes it highly attractive relative to existing Class A properties. Also, given that there are very few large contiguous spaces available in the market, we have a great opportunity to pre-lease a substantial portion of the building,” said John Kilroy, Jr., president and chief executive officer of KRC. “We intend to make the most of it—for the City and for our tenants.”
Christopher Roeder, David Churton and Ted Davies of Jones Lang LaSalle have been engaged by the company as the listing brokers for the project. “350 Mission will be a truly iconic project and is a pivotal piece of the revolutionary TransBay area redevelopment plan,” said Christopher Roeder, managing director of Jones Lang LaSalle. “Just as the TransBay transit center, in combination with the BART and Caltrain, will forever change how San Franciscans interpret transportation, I believe 350 Mission will change how we interpret office space in this city."
About Kilroy Realty Corporation. Kilroy Realty Corporation, a member of the S&P Small Cap 600 Index, is a real estate investment trust active in the office and industrial submarkets along the West Coast. For over 60 years, KRC has owned, developed, acquired and managed real estate assets, consisting primarily of Class A real estate properties in the coastal regions of Los Angeles, Orange County, San Diego County, the San Francisco Bay Area and greater Seattle. At June 30, 2012, KRC owned approximately 12.2 million rentable square feet of commercial office space and 3.4 million rentable square feet of industrial space.
Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on the Company’s current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of the Company’s control. Accordingly, actual performance, results and events may vary materially from those indicated in forward-looking statements, and you should not rely on forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in forward-looking statements, including, among others: risks associated with investment in real estate assets, which are illiquid, and with trends in the real estate industry; significant competition, which may decrease the occupancy and rental rates of properties; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired properties; the availability of cash for distribution and debt service and exposure of risk of default under debt obligations; adverse changes to, or implementations of, applicable laws, regulations or legislation; and the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts. These factors are not exhaustive. For a discussion of additional factors that could materially adversely affect the Company’s business and financial performance, see the factors included under the caption “Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2011 and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on information that was available, and speak only, as of the date on which they are made. The Company assumes no obligation to update any forward-looking statement made in this press release that becomes untrue because of subsequent events, new information or otherwise, except to the extent required in connection with ongoing requirements under Federal securities laws.