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Kilroy Realty Fully Leases Office Space At 100 Hooper, In Negotiations To Lease Up Mission Bay Project

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John Kilroy in his San Francisco office
Kilroy Realty Corp. CEO and Chairman John Kilroy

Kilroy Realty started this year on the right foot. The company just leased up the entire office space at 100 Hooper to Adobe and is in ongoing negotiations to lease the entire 700k SF life science project at The Exchange on 16th in Mission Bay, Kilroy Realty CEO John Kilroy said during a call with investors. Adobe previously pre-leased 207k SF, or 66%, of the 400k SF office project on Hooper and extended its lease by 107k SF earlier this week. Kilroy plans to lease up the remaining production, distribution and repair (PDR) space closer to the completion of 100 Hooper, which is expected to deliver Q3 2018.

Three projects under construction this year — The Exchange, 100 Hooper and the first phase of One Paseo in San Diego — will add 1.4M SF to Kilroy Realty's portfolio and total $980M in investment.

Kilroy Realty also had quite a year in 2016 in San Francisco. The developer expanded its Flower Mart project with the acquisition of another parcel, bringing the site up to seven acres. The company delivered 1.1M SF of new office across its entire portfolio. This included space for Salesforce at 350 Mission St. and space for Dropbox at 333 Brannan St. Occupancy in the San Francisco Bay Area was slightly lower at the end of last year — 97.6% compared to 98.1% at the end of 2015 — but Kilroy Realty is 98.4% leased up in the Bay Area.

Kilroy also acquired two buildings at Stanford Research Park last year for $130M with one building fully leased to Theranos and the other building leased to Perkins Coie. Both of the buildings are about 20% to 25% below market, offer strong cash flow and provide a good entry point into Palo Alto to expand its life science portfolio, John Kilroy said. Kilroy expects to grow the current 5% cap rate to 7% in the near term with the increase of below-market rent.