LOS ANGELES–Kilroy Realty Corporation said it has signed a definitive agreement to sell The Exchange on 16th, the company’s 750,000 square-foot office property located at 1800 Owens Street in San Francisco’s Mission Bay neighborhood, for a purchase price of $1.08 billion or approximately $1,440 per square foot.
Brokers have reported this as the highest per-square-foot sales price for a major property in the city’s commercial real estate market. The transaction is currently in escrow and expected to close at the end of March.
“This transaction demonstrates that quality assets in quality locations remain highly attractive to buyers and in this case generated a record price,” said John Kilroy, chairman and chief executive officer of KRC. “The return we achieved from development to disposition clearly highlights the value we have created through our development program. In addition, the strong price underscores the embedded value of our stabilized portfolio, which is well-leased, modern and highly sustainable.”
“This is a resounding sign that people are still excited to be a part of San Francisco and its future. I want to thank Kilroy Realty for their ongoing partnership and collaboration, and recognize them for how they continue to use their development expertise to move forward positive projects that help our economy grow and support the future of our City,” said London Breed, Mayor of the City and County of San Francisco.
KRC commenced development of The Exchange in late 2015 and signed a 15-year lease with Dropbox, Inc. (Nasdaq: DBX) for the entire office component of the property in 2017. At the time, it was the largest single Class A commercial lease transaction ever completed in San Francisco. The total development cost for the project was approximately $585 million or $780 per-square-foot.
The company will use the sale proceeds to fund development, for acquisitions, and for other general corporate purposes, including potentially paying down debt, repurchasing stock or paying a special dividend to the company’s common stockholders.