Kilroy Breaks Ground at 333 Brannan, Reflects New Corporate Urban Movement

333 Brannan groundbreaking Kilroy San Francisco The Registry real estate

By Neil Gonzales

It wasn’t until 2010 that the Los Angeles-based Kilroy Realty Corp. made its presence known in the Bay Area.

Since then, the real-estate investment trust has invested in about 5 million square feet of office development in the region. More than half of that–about 2.7 million–is in San Francisco. That makes Kilroy among the top 10 office landlords in the city with 11 percent of the inventory, according to Chicago-based real-estate services firm Jones Lang LaSalle.

[contextly_sidebar id=”1dcdc798c4ec0dc82fa6ca1d2b2c3423″]Last week, Kilroy ceremoniously broke ground on one of those investments–a $100 million, 180,000-square-foot speculative project at 333 Brannan St. in San Francisco. The project in the revitalizing, tech-heavy South of Market neighborhood will transform a parking lot that hosted chili cook-offs into an uber-green, six-story office building designed by William McDonough + Partners, a pioneer and leader in sustainable architecture. Swinerton Builders will be the general contractor.

The build-to-suit office space will be leased potentially to a single technology tenant and reflects the growing demand of companies seeking to set up shop in big cities. Kilroy poised itself well in this new era of corporate urbanism led by such tech giants as Google, Twitter and Salesforce.com, which has pre-leased the REIT’s other San Francisco project–a 450,000-square-foot high rise under way at 350 Mission St.

“We wanted to be in all the West Coast knowledge-based markets where tech and media and all those things are growing,” said Mike Sanford, Kilroy senior vice president for Northern California, adding that 333 Brannan is just the “continuation of that proliferation of people going more urban.”

Kilroy also has a speculative project in Redwood City–a 300,000-square-foot office development dubbed Crossing 900–and is building new corporate campuses in Silicon Valley for tech leaders LinkedIn and Synopsys.

The Brannan project is already drawing strong interest from about a dozen parties mostly in the tech and media sectors, Sanford said. “Most of the conversations we’ve been having is for the whole building.”

Kilroy is looking to lease the office space for about $70 per square foot annually in a city where rents have increased by double digits in recent years, he said. “We’re going to sign a deal that’s going to be in the upper end of rents in San Francisco.”

Expected to be completed in 2015, the project will feature a brick-and-glass exterior that conforms to the neighborhood’s light-industrial and warehousing history. The building is designed to achieve Platinum certification from the Leadership in Energy and Environmental Design program, the highest rating for environmentally conscious construction from the U.S. Green Building Council.

The many sustainable elements include solar panels, on-site water capture and recycling and a rooftop garden. “These and other innovations mean the building will consume 26 percent less energy and 45 percent less water than similar-sized office buildings here in the city,” Kilroy President and CEO John Kilroy Jr. said.

Moreover, the development is being designed as part of an urban micro grid that will share electrical energy, heating and cooling among neighboring buildings. “We’ve adopted and supported the strategies that the city has put forward in this neighborhood to create an eco-district,” said David Johnson, partner and managing director at William McDonough. “We continue to support those ideas as we go to find ways to share resources and spaces and places, to create a courtyard that we share, to create streets that invite people.”

Mayor Ed Lee lauded the project. “It not only adds to the exciting need for good office space,” Lee said, “but it’s being done in a kind of environmentally leadership way. [The project sets] the bar even higher for the kind of development we want in the city.”

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