The Mission Bay headquarters complex leased by Dropbox is being sold for $ 1.08 billion, the second highest price in San Francisco’s history for a single property.
Owner Kilroy Realty said on Monday that he had agreed to sell the 750,000-square-foot property for about $ 1,440 per square foot, the highest price per square foot in the city’s history. The four-building complex in 1800 Owens St. is branded Exchange.
The deal would eclipse all previous transactions, except for the $ 1.2 billion purchase of Boston Property in 1998 from the Embarcadero Center, which is about four times the size of the Exchange. Closing is scheduled for the end of this month.
Kilroy Realty declined to name the buyer. A source with knowledge of the business who was not authorized to speak publicly said it was KKR, the private equity giant. KKR did not immediately respond to a request for comment.
The coronavirus pandemic halted the San Francisco housing boom, with almost no major leases signed last year and several companies, including Dropbox, adopting a permanent remote work policy. But Exchange remains attractive to tenants, including in the growing biotechnology industry, because it can be configured as a laboratory space. After Dropbox listed about half the building for sublease, Vir Biotechnology occupied 133,896 square feet last year.
“This transaction demonstrates that quality assets in quality locations remain highly attractive to buyers and, in this case, generated a record price,” said John Kilroy, CEO of Kilroy Realty, in a statement.
Kilroy spent about $ 585 million building the Exchange and rented all of the office space to Dropbox in 2017, in what was the largest rental in the city at the time. Facebook’s rent for the entire Park Tower in the Transbay district set a new record in 2018.
The Exchange sale follows the $ 650 million sale of the Transamerica Pyramid during the pandemic and a $ 420 million deal last week for Uptown Station in Oakland, which is leased by Square.
“This is a resounding sign that people are still excited to be part of San Francisco and its future,” said Mayor London Breed in a statement.
The sale will be an unexpected fortune for the city, generating $ 64.8 million in real estate transfer fees. The tax bill is twice as high as it would have been in 2020, after voters approved Proposal I in November to double the transfer tax on sales from more than $ 25 million to 6% from this year. Kilroy gave $ 225,000 to oppose the measure.
The exchange’s annual property tax bill of around 1.2% will also increase to almost $ 1.3 million. It was valued at $ 789 million in 2019, generating nearly $ 9.5 million and making it the ninth most valuable property in the Bay Area.
KKR is one of the largest private equity firms in the United States, with a net profit of $ 1.94 billion last year. She has invested in hundreds of companies and owns the fitness operator of the San Francisco Bay Club. Its technology investments include application maker ByteDance, Lyft and Tik Tok.
Kilroy is one of the biggest owners on the West Coast and owns buildings rented by technology companies, including Adobe, Salesforce and Netflix. Stripe is moving from San Francisco to the Kilroy’s Oyster Point project in South San Francisco, which also includes biotechnology space.
Roland Li is a writer for the San Francisco Chronicle. Email: [email protected] Twitter: @rolandlisf