SAN FRANCISCO — For years, as they’ve jockeyed for tech jobs and the cachet that comes with them, San Francisco has touted its cosmopolitan allure, while San Jose has countered with its vast supply of land.

Now, in an effort to add a weapon to his city’s arsenal, San Francisco Mayor Ed Lee has proposed reshaping a 30-acre stretch of freeway and rail yards into high-density housing, shops, restaurants and more than 2 million square feet of high-rise office space.

But rather than a new stage in a Bay Area arms race, Lee’s plans are being hailed as a sign of a new, cooperative sentiment sweeping the region. “Mayor Lee wants to see how to promote the Bay Area,” said his spokeswoman, Chrisine Falvey. “There will

be widespread benefits if companies relocate or expand to San Francisco, San Jose, Oakland or nearby areas.”

Added San Jose Mayor Chuck Reed, whose city long has billed itself as Silicon Valley’s capital: “I’m worried about Texas,” not San Francisco. “We’ve got much bigger competition for companies that are expanding to other states and countries instead of keeping their growth in Silicon Valley.”

Enrico Moretti, a professor of economics at UC Berkeley who has studied the region’s history of innovation, said traditional rivalries have yielded to the reality of a fast-shifting business landscape.

“It used to be the case that tech companies were either in the South Bay or San Francisco. Now they are in both locations,” he

said. “And workers are much more mobile.”

At the same time, Moretti said, Lee’s proposal to knock down Interstate 280 north of 16th Street and relocate a Caltrain storage yard near ATT Park is an aggressive move for the business-friendly mayor, who has worked to keep startups in town as they grow.

Lee already has cut tax deals with such startups as Twitter in exchange for help revitalizing rundown areas, and he persuaded city voters in the fall to eliminate a payroll tax the mayor and others insisted punished companies for growth.

“Knocking down the 280 extension makes a lot of sense,” Moretti said. “It will free up a lot of land to attract companies and create jobs.”

Lee, in fact, said razing the overpass and rail yard is the city’s last, best hope to create the kind of corporate campuses that San Jose and other cities long have used to woo companies that have outgrown San Francisco’s South of Market area. The neighborhood is home to companies such as Zynga and Yelp and also includes the Mission Bay area, where city officials have already targeted expansion zones for tech firms.

But

some say the area already is so filled up there’s little room for growth.

“When you go to lunch in SoMa, you have to get out of the office before noon or you’re going to be standing in line,” said Jason Johnson, co-founder of startup accelerator Founders Den, which sits near the Caltrain yard in Lee’s sights and offers startups shared office space and other resources.

“At certain times, companies have to leave because of their size, or because of tax incentives elsewhere,” Johnson said. “San Francisco has lost a lot of companies over the years.”

To be sure, Lee’s plan won’t give San Francisco anywhere near the amount of office space San Jose boasts. The 30 acres the mayor thinks can be freed up is about the size of a single corporate campus on San Jose’s North First Street. And Reed and other San Jose officials are making plans of their own to add millions of square feet to that area, accommodating as many as 20,000 new jobs.

Rather than view Lee’s plan as a possible threat, Reed sees it as another piece of the region’s real estate portfolio.

“It’s important that we have options in the Bay Area,” Reed said. “North San Jose’s got one kind of development potential. We’ve got Coyote Valley with another kind of development potential. We’re trying to provide lots of different kinds of environments for companies to work in. Those that want to be in a San Francisco high-rise will choose that.”

Lee’s proposal isn’t without its sharp critics. Some

commuters worry it will slow traffic in and out of the city.

Caltrain officials, too, say they need the rail yard to house trains, especially with plans afoot to electrify the line as part of the state’s high-speed rail project. The city is paying for Caltrain to conduct an eight-month study weighing the plan’s potential impacts, according to Santa Clara County Supervisor Ken Yeager, who heads the Peninsula Corridor Joint Powers Board that owns and operates the commuter line.

Still, Yeager acknowledged, despite Caltrain’s concerns, Lee’s plan “would be a tremendous boon” for San Francisco and the rest of the region.

Ultimately, economic forces that are far stronger than the ambitions of the mayors of San Jose and San Francisco are likely to carry the day, said UC Berkeley’s Moretti, who wrote the 2012 book “The New Geography of Jobs.”

“The labor markets in the Bay Area are getting increasingly integrated,” Moretti said. “This is very good for the region, very good for high tech and very good for the Bay Area economy.”

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos. Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.

Article source: http://www.insidebayarea.com/business/ci_22831780/san-francisco-san-jose-team-up-keep-tech-280-development

LOS ANGELES, Jul 26, 2012 (BUSINESS WIRE) –
Kilroy Realty Corporation


/quotes/zigman/171049/quotes/nls/krc KRC
+1.05%



continued its successful pursuit
of value-add office building opportunities in strongly growing West
Coast commercial centers, acquiring a rare development site on Brannan
Street in San Francisco’s SOMA district and a Class A office tower in
greater Seattle’s prestigious Bellevue community.

KRC said the development site transaction, which closed last week,
represents a unique opportunity to build a state-of the-art office
property amid one of downtown San Francisco’s most popular technology
and media corridors at a total investment cost notably below recent
prices paid by other purchasers for similar assets.

In the Seattle transaction, which closed this week, the company said it
has purchased a premium quality, multi-tenant office tower, located in a
popular high-density submarket that is now experiencing strong demand
growth, at a price comfortably below replacement cost. KRC said it plans
to significantly enhance the property with a capital improvement and
modernization program that will support both property specific and
market-based rental rate growth.

Brannan Street Development Site Details. KRC paid
approximately $18.5 million for the 0.82-acre development site, located
at 329 Brannan Street in San Francisco’s SOMA district. The site is
zoned for approximately 5.0 FAR coverage and the company intends to
build a six-level office building designed to appeal to the area’s
growing community of technology and media companies. It is KRC’s second
ground-up development project in Northern California.

The new building will be LEED Gold certified. Its design will reflect
the dominant brick and timber character of the neighborhood, similar to
properties at 301 and 250 Brannan Street, which KRC also owns and which
are both 100% leased. The new building’s design will incorporate open
floor plates, concrete floors, large windows to capture natural light,
and multiple common areas–all features popular with the area’s creative
workforce.

KRC expects to complete entitlements for the development site by
year-end 2013 and complete the building in 2015. The company estimates
the total cost of the project, including land, will be approximately $80
million.

Seattle High-Rise Acquisition Details. KRC paid
approximately $186 million for the 417,000 square-foot, 24-story, Class
A office tower known as Skyline Tower located in Bellevue, Washington.
The purchase price includes the assumption of an in-place mortgage of
approximately $84 million. The loan bears interest at a rate of 6.37%
and matures on April 1, 2013.

Skyline Tower is a LEED Silver certified property featuring spectacular
views of the Cascade and Olympic Mountains and Mount Rainier, and sits
in close proximity to Bellevue’s affluent residential and retail
neighborhoods. The property, which is two blocks from KRC’s Key Center
office tower, is currently 92% leased to a diverse tenant base that
includes technology companies Expedia and Valve Corporation.

About Kilroy Realty Corporation. Kilroy Realty
Corporation, a member of the SP Small Cap 600 Index, is a real estate
investment trust active in premier office and industrial submarkets
along the West Coast. For over 60 years, the company has owned,
developed, acquired and managed real estate assets, consisting primarily
of Class A real estate properties in the coastal regions of Los Angeles,
Orange County, San Diego, greater Seattle and the San Francisco Bay
Area. At March 31, 2012, the company owned 11.8 million rentable square
feet of commercial office space and 3.4 million rentable square feet of
industrial space. More information is available at
http://www.kilroyrealty.com .

Forward Looking Statements. This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are based
on our current expectations, beliefs and assumptions, and are not
guarantees of future performance, results or events. Forward-looking
statements are inherently subject to uncertainties, risks, changes in
circumstances, trends and factors that are difficult to predict, many of
which are outside of our control. Accordingly, actual performance,
results and events may vary materially from those indicated in
forward-looking statements, and you should not rely on forward-looking
statements as predictions of future performance, results or events.
Numerous factors could cause actual future performance, results and
events to differ materially from those indicated in forward-looking
statements, including, among others: risks associated with investment in
real estate assets, which are illiquid, and with trends in the real
estate industry; competitive market conditions; the ability to complete
potential acquisitions and dispositions on announced terms; the ability
to successfully operate acquired properties; the availability of cash
for debt service and exposure of risk of default under debt obligations;
government regulations that may affect development, redevelopment and
use of properties; and the ability to successfully complete development
and redevelopment projects on schedule and within budgeted amounts.
These factors are not exhaustive. For a discussion of additional risk
factors that could adversely affect our business and financial
performance, see the factors included under the caption “Risk Factors”
in our annual report on Form 10-K for the year ended December 31, 2011,
quarterly report on Form 10-Q for the quarter ended March 31, 2012, and
our other filings with the Securities and Exchange Commission. All
forward-looking statements are based on currently available information
and speak only as of the date on which they are made. We assumes no
obligation to update any forward-looking statement made in this press
release that becomes untrue because of subsequent events, new
information or otherwise, except to the extent it is required to do so
in connection with ongoing requirements under Federal securities laws.

SOURCE: Kilroy Realty Corporation

        Kilroy Realty Corporation
        Tyler H. Rose
        Executive Vice President
        and Chief Financial Officer
        310-481-8484
        or
        Michelle Ngo
        Vice President
        and Treasurer
        310-481-8581

Copyright Business Wire 2012

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Add to portfolio

KRC

Article source: http://www.marketwatch.com/story/kilroy-realty-corporation-acquires-value-add-opportunities-in-two-west-coast-tech-and-media-centers-2012-07-26