Kilroy Enters Austin Market with $580M Purchase; Strikes Other West Coast Deals
The firm has acquired Indeed Tower, a 730,000-square-foot LEED-certified office property in Austin.
Los Angeles-based Kilroy Realty has entered the Austin market with the acquisition of Indeed Tower for $580 million. The 36-story, 730,000-square-foot office property is LEED-Platinum certified and located in the Austin’s central business district.
Indeed Tower is 57% leased. Indeed.com is the largest tenant in the building, occupying 42% of the property through 2034. Kilroy plans to drive value through the strategic lease up of the property, and there is a lot to offer. The building has 30,000-square-foot floor plates and offers tenants 10,000 square feet of ground floor food and beverage space and 30,000 square feet of outdoor deck space.
John Kilroy, the company’s chairman and CEO said that the property seamlessly fits within the firm’s “strategic and property objectives.” Those objectives include the properties location within a growing tech hub that includes major tenants like Facebook, Google and Box, and the ability to drive value through a lease-up campaign. This acquisition is the first of what will likely be an ongoing expansion in Austin.
While Austin has certainly been a leading growth market in the nation—largely do to inward migration from major metros—the office market in the city was badly impacted by the pandemic. Earlier this year, a report from CommercialEdge showed that Austin was one of the top three cities with the highest increase in office vacancy during the pandemic. The city’s vacancy rate grew 720 basis points. San Francisco and Seattle were the other two cities on the list with vacancy rates up 550 and 480 basis points, respectively.
Kilroy’s Austin acquisition was part of a trio of recent closings. In two other separate transactions, the firm acquired a land site in San Diego for $42 million. The site is adjacent to Kilroy’s property at 2100 Kettner, a 220,000-square-foot office building. It plans to develop 275,000 square feet of office space to enhance its presence in the San Diego market.
Kilroy also purchased a ground lease in Bellevue, Washington for $47 million. The leased land site houses Kilroy’s 488,000-square-foot Key Center and has a remaining term of 72 years. Owning the lease will eliminate Kilroy’s rent obligation, which was expected to increase in the coming years.