Kilroy Realty Corp. has broken ground on Gravitate, the second phase of its 3 million-square-foot waterfront development in South San Francisco, Kilroy Oyster Point. The $940 million addition will comprise three buildings totaling approximately 860,000 square feet. The developer has tapped JLL to handle preleasing efforts at Gravitate.
In Kilroy Realty’s first quarter earnings call, CEO John Kilroy said that the developer has already invested $150 million in land and infrastructure for the second phase of Oyster Point. He added that Kilroy is already in negotiations with several prospective tenants.
Gravitate will feature open floorplates of around 40,000 square feet across the seven- and eight-story buildings, with a floor load capacity of roughly 125 lbs. per square foot. The buildings will have a ratio of roughly 70 percent lab space and 30 percent office space. The second phase will include amenities that will serve all the phases. Among these is an outdoor amphitheater, outdoor meeting spaces, a gym and full-service restaurant.
The 50-acre Kilroy Oyster Point development is located in the South San Francisco submarket, one of the nation’s largest hubs for life sciences, along Oyster Point Boulevard. Tenants will have access to a ferry terminal, among other transit routes. The waterfront campus is situated right next to State Route 101 (Bayshore Freeway) and about 6 miles north of San Francisco International Airport. Corporate neighbors include pharmaceutical companies, biotechnology research and other industry-adjacent companies.
Betting big on life sciences
According to a recent Kidder Mathews report, San Mateo County had 1.1 million square feet of gross absorption (and 460,486 square feet of positive net absorption) of life science space in the first quarter, leading all Bay Area regions. The area will continue to see developers investing heavily in the life sciences sector, as vacancies reached 4.5 percent in the same period. There were roughly 3.7 million square feet of life science office space under development across San Mateo, San Francisco and Alameda counties, the same report shows.
The first phase of the 50-acre Oyster Point, dubbed Inception, is expected to be completed this month. The three buildings, totaling 656,000 square feet, are fully leased. In July 2019, Cytokinetics signed a lease for 235,000 square feet, while in October that same year, Stripe agreed to occupy the remaining 421,000 square feet. The first phase has been designed to achieve LEED certification.
In the 2018 annual letter to its shareholders, Kilroy Realty stated that it invested $565 million in new opportunities, which included the initial, 39-acre site at Oyster Point that was fully entitled for life science redevelopment, as well as the adjacent, 146,000-square-foot Oyster Point Tech Center. According to CommercialEdge, Kilroy acquired the office building for $111 million from MEPT. The Oyster Point site was purchased for $308 million, according to PropertyShark.
In the company’s first quarter earnings call, Kilroy also mentions that the developer has a total life sciences development pipeline of almost 3.5 million square feet, including future phases of Oyster Point, as well as three similar projects in San Diego.