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Kilroy Realty Leases 9455 Towne Centre Drive Development

Zacks Equity Research

Kilroy Realty Corporation KRC has signed a long-term lease with a major technology company at 9455 Towne Centre Drive project (9455 TCD). The tenant will occupy the entire property in the University Towne Centre sub-market of San Diego.

Specifically, the five-story development spans 160,400 square feet of space and is scheduled to complete in mid-2020. Per management, "With the execution of this lease, the office and life science component of our $2.1 billion of development projects under construction is now approximately 90% leased.”

The state-of-the-art project will offer space for office and life-science users. The LEED Platinum building will feature 30,000 square feet, flexible floor plates, 600 parking spaces and floor-to-floor heights of 15-16 feet. Further, it will offer an array of amenities, including resource-efficient sustainable features, collaborative common areas, an indoor and outdoor fitness center, and a roof deck.

San Diego is the hub of technology and life science. Further, the above-mentioned property is in close proximity to major freeways, and the presence of various retail and entertainment options in the neighborhood makes it a strategic location.

In fact, the tech industry continues to be a major tenant of office landlords. Per the outlook, tech tenants accounted for 21.6% of the overall leasing activity in first-half 2019. Furthermore, as of mid-2019, nearly 4,000 tenants were looking for large blocks of office spaces, with tech tenants representing the highest percentage.

Looking ahead, the technical workforce is projected to shoot up 13.2% from 2016 through 2026. Thus, tech tenants will likely impact office demand significantly in the days ahead. Kilroy Realty’s portfolio of Class A properties in coastal regions of the nation is well-positioned to benefit from this trend.

Currently, Kilroy Realty carries a Zacks Rank #3 (Hold). Over the past six months, shares of the company have gained 5.2%, as against the industry’s decline of 2.5%.

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