During Kilroy Realty Corp.’s Q2 results call, John Kilroy, president and CEO of the REIT, said that the company continues to see very healthy conditions across the firm’s West Coast markets, with second quarter setting an all-time high for the firm in terms of leasing volume.
“We signed new or renewing leases on more than 1.3 million square feet on our stabilized portfolio, with rents up 30% on a GAAP basis and 10% on a cash basis. We leveraged the strength of our existing portfolio to create a new 375,000 square foot headquarters for GM Cruise, combining buildings in San Francisco’s most sought-after technology corridor into an urban campus,” he said on the call.
He also said that the firm has made substantial progress and backfilling in its major 2018 and 2019 lease expirations. “We have commenced an improvement work on both 100 Hooper, our 400,000 square foot project in SOMA, and The Exchange, our 750,000-square-foot project in Mission Bay. We completed our acquisition of Kilroy Oyster Point, a premier waterfront life science development opportunity located in South San Francisco, and we are making progress on all our capital recycling plants. We are now non-refundable on the sale of our Bay Area office campus for $160 million.”
As for the specific details, Kilroy noted that the company’s second quarter leasing activity hit record levels, with improving fundamentals in each of our markets, transactions were spread throughout its portfolio and negotiations were fast and efficient, some in record time. “This was demonstrated by a 12-year lease we signed in June with a software company for just over 100,000 square feet at our 250 Brannan St. property in San Francisco, as The REIT Wire reported. The tenant moved quickly to secure sufficient workspace to accommodate its growth plans. And rent was up substantially over the prior lease, 50% on a cash basis and 100% on a GAAP basis, generating approximately $2.5 million in higher cash NOI on a stabilized basis.”