By Meghan Hall
Biotech and life sciences firms have been stalwarts within the commercial real estate industry over the past year, as their operations demand in-person work. As a result, companies continue to plan for their expansion. In December, Vir Biotechnology Inc., signed up to take 133,896 rentable square feet at 1800 Owens in San Francisco, according to a recent SEC filing. The owner of the building is KRE Exchange Owner LLC, affiliated with KKR.
Vir’s lease is located on floors eight through 12 and will serve as the company’s future executive office spaces. The lease also includes lab space for research and development. The SEC filing also indicates that Vir will have first right of refusal to lease the seventh floor of the project in the future. In all, the building totals 750,000 square feet.
Vir has previous experience with the building, having previously leased space from Dropbox. Dropbox had originally leased the entire office component of the property for 15 years in 2017, marking the single largest lease transaction completed in San Francisco. Since then, however, Dropbox has decided to sublet most of its space as a result of the pandemic and only intends to keep around 90,000 square feet as it implements a “remote first” work policy.
However, the sublease was terminated as a result of Vir’s new lease at the property.
The lease officially began on December 16th, according to documents, and the lease will run for 12 years. Vir will initially pay just oer $850,000 in rent for the first year, and then rents will increase by three percent each subsequent year. Vir has also been awarded just over $36 million in tenant improvement allowances, as well as a building improvement allowance of about $2.34 million.
The building, also known as The Exchange on 16th, was acquired by KKR from Kilroy Realty Corporation in March for $1.08 billion, or about $1,440 per square foot. At the time of the deal, sources familiar with the market noted it was the highest per-square-foot sales price for a major property in San Francisco’s commercial real estate market. The development costs for the project itself totaled $585 million, or $780 per square foot.