Kilroy Realty Corporation (NYSE: KRC) continued its successful pursuit of value-add office building opportunities in strongly growing West Coast commercial centers, acquiring a rare development site on Brannan Street in San Francisco’s SOMA district and a Class A office tower in greater Seattle’s prestigious Bellevue community.
KRC said the development site transaction, which closed last week, represents a unique opportunity to build a state-of the-art office property amid one of downtown San Francisco’s most popular technology and media corridors at a total investment cost notably below recent prices paid by other purchasers for similar assets.
In the Seattle transaction, which closed this week, the company said it has purchased a premium quality, multi-tenant office tower, located in a popular high-density submarket that is now experiencing strong demand growth, at a price comfortably below replacement cost. KRC said it plans to significantly enhance the property with a capital improvement and modernization program that will support both property specific and market-based rental rate growth.
Brannan Street Development Site Details.
KRC paid approximately $18.5 million for the 0.82-acre development site, located at 329 Brannan Street in San Francisco’s SOMA district. The site is zoned for approximately 5.0 FAR coverage and the company intends to build a six-level office building designed to appeal to the area’s growing community of technology and media companies. It is KRC’s second ground-up development project in Northern California.
The new building will be LEED Gold certified. Its design will reflect the dominant brick and timber character of the neighborhood, similar to properties at 301 and 250 Brannan Street, which KRC also owns and which are both 100% leased. The new building’s design will incorporate open floor plates, concrete floors, large windows to capture natural light, and multiple common areas—all features popular with the area’s creative workforce.
KRC expects to complete entitlements for the development site by year-end 2013 and complete the building in 2015. The company estimates the total cost of the project, including land, will be approximately $80 million.