SAN FRANCISCO — Kilroy Realty Corp. (NYSE: KRC) has agreed to sell The Exchange on Sixteenth, a 750,000-square-foot office campus located at 1800 Owens St. in San Francisco’s Mission Bay neighborhood. The buyer was not disclosed, but the San Francisco Chronicle reported it was KKR, a private equity firm based in New York.
The agreed purchase price is a little more than $1 billion, equating to approximately $1,440 per square foot. Kilroy Realty says this is the highest per-square-foot sales price for a “major property” in the history of San Francisco’s commercial real estate market. The Chronicle reports the sale represents the second largest transaction for a single property in the city’s history.
“This transaction demonstrates that quality assets in quality locations remain highly attractive to buyers, and in this case generated a record price,” says John Kilroy, chairman and CEO of Kilroy Realty.
Software storage giant Dropbox Inc. (NASDAQ: DBX) signed a 15-year lease for its corporate headquarters at the campus in 2017. The San Francisco Business Times reported last summer that the company listed 270,000 square feet of its space at the campus for sublease as the COVID-19 pandemic caused most of its staff to work remotely.
Kilroy Realty began construction in late 2015 on The Exchange on Sixteenth with a total development cost of $585 million, or $780 per square foot.
In addition to Dropbox’s office campus, The Exchange on Sixteenth features an exterior plaza, showers and lockers, exterior bike racks and a parking garage with valet.
The transaction is currently in escrow and expected to close at the end of the month.
Kilroy Realty is a Los Angeles-based REIT with a portfolio that includes 14.6 million square feet of office and life sciences space, as well as 808 residential units in San Diego and Hollywood. The firm’s office and life sciences holdings are primarily in the West Coast markets of San Diego, Los Angeles, San Francisco and Seattle. The company also has 1.9 million square feet of office and life sciences space under construction valued at $1.6 billion.
Kilroy Realty’s stock price closed on Monday, March 8 at $68.40 per share, up from $67.89 a year ago.
— John Nelson