Kilroy Acquires 25 Acres for Development

CARLSBAD, CA-It’s no secret that land is difficult to come by in Southern California, but one of the areas with significant swaths left to develop is the Carlsbad submarket. The latest deal set to take place locally is Kilroy Realty Corp.’s pitch for 25 acres on a site known as Carlsbad Oaks North.The Los Angeles-based REIT is under contract on the land, which is set to close during the second half of 2006. Once development begins, Kilroy would build-out between 250,000 sf and 350,000 sf of office space, according to a public filing by the company. The project costs would range between $75 million and $90 million.Lannie Allee, a broker with CB Richard Ellis, tells Globest.com that the Carlsbad area is “the only area where a lot of land has become available in the last year and a half.” Allee says about 400 acres were freed up in that timeframe as the different parcels, zoned for industrial and corporate business parks, received their approval maps.While Allee is not brokering the Kilroy land, he is familiar with the market, having worked on deals at the nearby 132-acre Bressi Ranch Corporate Center. Once the maps got the greenlight, developers made a land grab for the sites, he adds. Local stalwarts such as H.G. Fenton Co. gobbled up pieces, but outside outfits such as Minneapolis-based the Ryan Cos. And London-based Slough Estates have been active as well.Ryan picked up 20.8 acres at Bressi Ranch with plans for industrial condos. Ryan paid Irvine-based Sares-Regis Group $17.6 million for the land. In its stake, Slough Estates acquired a 41-acre parcel at Bressi Ranch, where the developer plans a 700,000-sf spec project.As reported earlier this week on Globest.com, Los Angeles-based Arden Realty Inc. is set to fetch a $5-billion pay day and go private, leaving Kilroy and Maguire Properties as the two remaining dominant Southern California-focused office REITs. Both firms have had aggressive years, adding to their massive portfolios.For Kilroy, San Diego County has been a major target. The firm’s development pipeline in San Diego “includes the potential to build approximately two million sf of office space in addition to the 644,000 sf of leased office product the company currently has under construction or committed,” according to its recent public filing.Among the local buys this year: Kilroy paid $24 million for 11 acres along SR-56, where it plans to develop Santa Fe Summit Phase II on the site. The office project will count 350,000 sf. The project will be adjacent to Kilroy’s Santa Fe Summit Phase I, which is currently being planned and will count 466,000 sf of office space in four, four-story buildings when complete.In an October deal, Kilroy paid $24 million for a 20-acre site along the I-15 corridor that is fully entitled and includes a 303,000-sf multi-use facility. At the lease’s expiration, next fall, Kilroy will then begin a major redevelopment of the site.On tap are plans to develop from 600,000 sf to one million sf of office space over several phases, according to Kilroy officials. The site has entitlements for 1.8 million sf of office and industrial space.