Dealmaker: Kilroy Realty Completes $226M in Value-Add Acquisitions
Kilroy Realty Corp., Los Angeles, acquired a Los Angeles office campus and a land site in downtown San Diego for $226 million.
Both properties are in urban neighborhoods with public transit options and rapidly developing infrastructure. The firm noted both properties offer development or redevelopment opportunities.
KRC paid $186 million in October for the 158,000-square-foot, fully leased Blackwelder office campus at 3101-3243 La Cienega Boulevard in Los Angeles’s Culver City submarket. The 6.9-acre site hosts 19 one- and two-story buildings leased to creative tenants with an average in-place lease term of 39 months. Kilroy said it intends to significantly increase the project’s square footage through redeveloping the campus over time.
Culver City draws the area’s creative industries, including Amazon, Apple, HBO and Sony Pictures. Class A office space in the area has seen rapid rental growth over the past three years, with very low vacancies.
The site is close multiple transportation options including the Metro Expo Line, Interstates 405 and 10 and Los Angeles International Airport and Burbank Airport.
In August, KRC paid $40 million to acquire a fully entitled 2.3-acre site occupying a full city block at 1335 Broadway and an adjacent partial city block at 901 Park Boulevard in downtown San Diego’s East Village submarket. The site’s flexible zoning will allow KRC to develop a mixed-use project. The company said it plans a modern development that reflects the neighborhood’s urban, mixed-use character and may include rooftop decks and balconies, street-level retail and ground-level open space.
The neighborhood has become attractive to the city’s burgeoning Millennial population. Over the past five years, nearly 4,500 new residential units have delivered in the area with another 3,000 units under construction and 2,500 units approved or in planning review. Retail amenities and activities including Petco Park, the new San Diego Central Library and UCSD’s new East Village extension campus have followed.
The acquisition included three existing buildings leased to the prior owner through mid-2021. KRC Chairman and CEO John Kilroy said both purchases offer “significant upside through development and redevelopment, and in the case of the Culver City campus, provide near-term earnings growth through rents that are well below market.”
