File hosting company Dropbox Inc. signed the largest office lease in San Francisco history, taking all 736,000 square feet of the Exchange in Mission Bay.
The deal is a triumph for developer Kilroy Realty Corp. (NYSE: KRC), which had been in talks with prospective tenants for two years and was building the $570 million, four-building project at 1800 Owens St. without any lease commitments.
Dropbox's 15-year lease surpasses Salesforce.com Inc. (NYSE: CRM)'s 2014 deal for 714,000 square feet at Salesforce Tower, previously the city's largest. It follows recent six-figure leases from tech giants Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN) and Alphabet Inc. (NYSE: GOOG)'s Google Inc. In the past year, deals from mature tech companies rather than startups have accounted for the bulk of major office deals.
"We're delighted to have Dropbox as our tenant at the Exchange," said John Kilroy, CEO of Kilroy Realty, in a statement. "This dynamic organization and their highly skilled workforce inspires us and our design as we look to the future and anticipate the needs of today's creative workforce. Dropbox's expansion at the Exchange is an excellent example of the entrepreneurship and innovation that drives San Francisco's economy and has made the city one of the strongest commercial real estate markets in the world."
The Exchange was the city's fourth-largest approved or under construction office project without tenants. Dropbox's rent wasn't clear, but new projects have typically sought $80 per square foot or more annually.
"We're excited to partner with Kilroy to create a new home for our growing team. The Exchange is a space that will reflect our creative culture and inspire us to continue building great products for our users," said Drew Houston, CEO of Dropbox, in a statement.
Dropbox, which rents out online storage space, current leases at 333 Brannan St. and 345 Brannan St. It's said to be preparing an initial public offering.
Kilroy Realty said in February that it was in talks to lease the entire project to one tenant. But in April, the company said it was instead pursuing multiple tenants and was spending an additional $75 million to configure the space for life sciences use as well as tech. The project also include 14,000 square feet of retail space.
Multiple sources said that the University of California, San Francisco, which has its main campus next to the project, had considered taking the space.
Brokerages CBRE and Kidder Mathews were the Exchange's leasing agents. Riose Clementi Hale Studios and Flad Architects designed the project. Hathaway Dinwiddie Construction is the general contractor.
Kilroy's next big office project is the 2 million-square-foot Flower Mart redevelopment, which awaits the city's Central SoMa rezoning. It also has an agreement to buy the 2 million-square-foot Oyster Point project in South San Francisco, according to public records.
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