Kilroy: We Saw 2010 As An Opportunity

LOS ANGELES—“We saw 2010 as an opportunity,” said John Kilroy, chairman of the board, president and CEO of Kilroy Realty Corp., at the Allen Matkin's View from the Top conference earlier this week. Kilroy reflected on the downturn as years of great acquisition opportunities for the company; a move that he admits really paid off. “The last five years has been good to us,” he says, adding that the company is no longer in a buying phase. “Buying doesn't make sense at this point in the cycle. I'd rather sell at a 4% cap than buy.”

The crux of Kilroy's speech was an update on the $1.5 billion of West Coast development that the firm has underway throughout California. Of the company's developments, 45% are in Southern California and 55% are in Northern California. Kilroy focused on his three largest projects, Columbia Square in Hollywood and the Exchange at 16^th and the Flower Mart in San Francisco. Columbia Square is a 685,000-square-foot mixed-use complex on the former CBS Studio lot in Hollywood. It has already signed a lease with NeueHouse, a co-working space, and a major 180,000-square-foot lease with Viacom. Kilroy admitted that its competitor in the market is the nearby ICON at Sunset Bronson Studios, which just signed a 200,000-square-foot lease with Netflix, but said that he is in negotiations with some major tenants, and they'll be ready to make announcements soon.

The Exchange at 16^th broke ground earlier this month, and is the company's third San Francisco ground-up development. The 700,000-square-foot office and retail mixed-use project will cost an estimated $485 million. The Flower Mart, also in San Francisco, is a 655,000-square-foot mixed-use property with two mid-rise buildings. Kilroy noted that this project received some negative feedback from locals, including protests. As a result, he says, the company worked with the community to find a compromise—which included keeping the historic 60-year-old Flower Mart onsite—to move forward without animosity.

Kilroy noted that the company has been named the number one developer in the country and the top-five developer in the world. He has a unique perspective on development, and aims to create iconic, forward-thinking projects. “We invest in centers of innovation,” he said. “Art is inherent in everything that we do.”