Kilroy Realty, a Los Angeles-based real estate investment trust, has launched the second phase of its ambitious 3-million-square-foot life sciences campus, Oyster Point, located in South San Francisco. This new development covers 865,000 square feet across three newly completed buildings, specifically designed to accommodate biotech companies.

Shift in Tenant Demographics

Despite the campus’s original design targeting life sciences firms, interest has been predominantly from technology and financial services companies. The new phase, which opened for occupancy last month, has drawn a range of prospective tenants, although specific lease terms remain undisclosed.

“The buildings are purpose-built life sciences — that was the original intent. That’s still our intent,” said Rob Paratte, Kilroy’s Chief Leasing Officer, reaffirming the company’s commitment to the life sciences sector.

Market Context

The current landscape reveals a challenging environment for life sciences businesses, characterized by a notable downturn in investment. This period of contraction began four years ago, contributing to a surplus of biotechnology office and laboratory spaces throughout the Peninsula. As a result, many high-end biotech facilities are now exploring diversification into non-biotech tenants.

Community Features Driving Attraction

Angela Aman, CEO of Kilroy, noted that the evolving interest in the second phase of Oyster Point is attributed to its enhanced community amenities. The latest facilities include:

• On-site restaurant
• Fitness center
• Conference center
• Amphitheater

Aman mentioned, “We’re seeing that result in additional tour activity and additional constructive conversations across a broad range of tenants and a broad range of sizes as well,” highlighting the positive shift in tenant discussions.

Background on Kilroy Realty

Founded in 1996 by John Kilroy Jr., Kilroy Realty has grown to manage a substantial real estate portfolio of 14 million square feet. Their holdings prominently feature life sciences properties in key markets including the Bay Area, Seattle, and San Diego. The ongoing developments at Oyster Point represent a significant investment in the future of the life sciences sector, despite the current market challenges.