Kilroy Realty Buys Seattle Land Site, Eyes Multi-Use Prospects

Kilroy Realty Corporation (NYSE:KRC) recently announced the acquisition of a five-parcel land site,spanning 1.37 acres in Seattle’s central business district (CBD). The company has shelled out $133 million for this purchase and plans to undertake a mixed-use project on the acquired land.

At present, the site encloses a 31,000-square-foot building entirely leased to Bank of America (NYSE:BAC) , three surface parking lots, a parking structure, and the 10-story Lloyd Building, spanning 47,000 square feet of space, which is 75% leased under numerous short-term leases.

The company intends to get entitlement permissions to develop a mixed-use project that will offer nearly 900,000 square feet of office space, including the Lloyd Building, which will be fully revamped, as well as ground-floor food and beverage retail, and underground parking, spanning 25,000 square feet of space.

While the in-place zoning at the 1825 7^th Avenue-parcel offers scope for around 575,000 square feet of residential development, the company is considering other alternatives.

The site’s strategic location will enable the company to enjoy decent demand at the mixed-use development. In fact, the site is in close proximity to Amazon’s main headquarters and the well-known Pike Place Market. Further, it is located between Seattle’s retail hub, anchored by the newly-renovated Pacific Place, Denny Triangle, and South Lake Union. The site is well-positioned to benefit from the presence of established technology, education, biotechnology and creative firms, such as Facebook (NASDAQ:FB), Google (NASDAQ:GOOGL), HBO, Zillow, Redfin and Kaiser Permanente in South Lake Union.

Additionally, the location is transit-friendly with easy access to the South Lake Union Trolley, bus and Westlake Station — Seattle’s light rail station.

Management noted, “This opportunity fits our investment thesis well: extremely well-located, unsurpassed transportation options and surrounded by world-class tenants and amenities." Further, the company has added an opportunistic development, located in a dynamic market, to its portfoliot hrough this acquisition.

Currently, Kilroy Realty carries a Zacks Rank #3 (Hold). Over the past six months, shares of the company have gained 4.7%, as against the industry’s decline of 2.4%.

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