Kilroy Realty Corporation (NYSE: KRC) today said it has signed a long-term lease with cloud-computing giant salesforce.com for 100% of the real estate investment trust’s 27-story, LEED-platinum-designed office tower now under construction at 350 Mission Street in the heart of San Francisco’s South of Market financial district. Salesforce.com has agreed to lease up to approximately 445,000 square feet which includes approximately 50,000 square feet of must-take space that is subject to KRC obtaining entitlements to add three stories to the building.
KRC acquired the 350 Mission Street land site in October and saw tremendous interest in the property from multiple companies in a variety of technology and non-technology-related industries. Upon completion of the building, the company will own 2.6 million square feet of office space in SOMA that is currently 94% leased or committed.
KRC’s ground-breaking design for the new building adapts its signature open-plan workspace concepts to a high-rise office development, producing work environments on each floor that feature open floorplates, high-ceilings and abundant natural light. The building’s design also incorporates state-of-the-art sustainability practices and energy-efficiency standards that are expected to earn it LEED Platinum certification—the first ground-up commercial development property in San Francisco to do so.
Salesforce.com, the global leader in enterprise cloud computing, will occupy a unique location in downtown San Francisco’s highly desirable SOMA district as it takes delivery of the building in phases throughout 2015. Situated at the corner of Mission and Fremont Streets, the new epicenter of the City’s business district and immediately across the street from the Transbay Transit Center, 350 Mission offers convenience, urban amenities and high visibility. The prominent location will be heightened with a 50-foot, open air entry lobby featuring a 40-foot by 75-foot electronic media display—the first of its kind in San Francisco.
“This is a remarkable outcome for a remarkable development in what is unquestionably one of our nation’s most important centers of innovation,” said John Kilroy, Jr., president and chief executive officer of KRC. “Salesforce.com understood immediately what we were creating at 350 Mission Street and they didn’t waste any time securing the property for their dynamic workforce. We’re delighted to be partnering with them.”
“Kilroy scores again. In three short years, the Kilroy team has demonstrated the rare ability to anticipate supply and demand forces in San Francisco, securing their lasting legacy,” says Christopher T. Roeder, International Director of Jones Lang LaSalle and Kilroy Realty representative in the transaction.
Dan Harvey, Executive Vice President of Cushman & Wakefield, represented the tenant.
The company estimates the total development cost for the 27-story building will be approximately $250 million and could increase by approximately $25 million if the additional entitlements are obtained.
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 property sector along the West Coast. For over 60 years, the company has owned, developed, acquired and managed real estate assets primarily in the coastal regions of Los Angeles, Orange County, San Diego, greater Seattle and the San Francisco Bay Area. At September 30, 2012, the company's stabilized office portfolio encompassed 12.7 million rentable square feet. More information is available at http://www.kilroyrealty.com.
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 our 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 our 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; 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 our business and financial performance, see the factors included under the caption "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2011 and our 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. We assume 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.