Kilroy Realty Corp. said Dec. 18 in a prepared statement that it has signed a long-term lease with cloud-computing giant Salesforce.com Inc. for 100 percent of the real estate investment trust’s 27-story, LEED-platinum-designed office tower now under construction at 350 Mission St. in San Francisco’s South of Market Financial District.
Salesforce has agreed to lease up to approximately 445,000 square feet, which includes approximately 50,000 square feet of must-take space that is subject to KRC obtaining entitlements to add three stories to the building.
KRC acquired the 350 Mission St. land site in October and saw tremendous interest in the property from multiple companies in a variety of technology and non-technology-related industries, the company said. Upon completion of the building, the company will own 2.6 million square feet of office space in SOMA that is currently 94 percent leased or committed.
KRC’s design for the new building adapts its signature open-plan workspace concepts to a high-rise office development, producing work environments on each floor that feature open floor plates, high ceilings and abundant natural light. The building’s design also incorporates state-of-the-art sustainability practices and energy-efficiency standards that are expected to earn it LEED Platinum certification.
Salesforce.com, an enterprise cloud computing company, is to take delivery of the building in phases throughout 2015. Situated at the corner of Mission and Fremont streets, the site is across the street from the Transbay Transit Center, a huge new transportation hub that is to serve the entire Bay Area. The new building is to feature a 50-foot, open-air entry lobby with a 40-foot by 75-foot electronic media display.
“This is a remarkable outcome for a remarkable development in what is unquestionably one of our nation’s most important centers of innovation,” said John Kilroy Jr., president and chief executive of KRC, in the company’s statement. “Salesforce.com understood immediately what we were creating at 350 Mission St., and they didn’t waste any time securing the property for their dynamic workforce. We’re delighted to be partnering with them.”
“Kilroy scores again. In three short years, the Kilroy team has demonstrated the rare ability to anticipate supply and demand forces in San Francisco, securing their lasting legacy,” said Christopher T. Roeder, international director of Jones Lang LaSalle and the Kilroy Realty representative in the transaction.
New Jones Lang research shows that even before the latest Salesforce lease was announced, San Francisco office landlords have benefitted in the last year not just from technology company leasing but from “large-block leasing” by technology tenants—including Salesforce itself, which started 2012 with a 401,000-square-foot lease at 50 Fremont St. in San Francisco. So far this year, excluding the latest Salesforce contract, 11 tenants have signed leases exceeding 100,000 square feet apiece, according to JLL. All but three of them were technology companies. Collectively, they absorbed 1.9 million square feet. With this lease, the total swings to well above 2 million.
As of 7:30 p.m. Dec. 18 Pacific time, Salesforce had filed no documents with the U.S. Securities and Exchange Commission to disclose the details of the lease.
Dan Harvey, executive vice president of Cushman & Wakefield, represented the tenant.
Kilroy estimates the total development cost for the 27-story building will be approximately $250 million and could increase by approximately $25 million if the additional entitlements are obtained.
Law firm Allen Matkins, including partners Tony Natsis and Mike McFadden, represented Kilroy in the transaction. Paul Hastings partner Stephen Berkman and associate Michael T. Kovaleski represented Salesforce.
Photo courtesy of Kilroy Realty