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In San Fran's second-largest sale in its history, Dropbox headquarters to sell for over $1billion

San Francisco Window Replacement Center

As reported recently in The San Francisco Chronicle, the Mission Bay headquarters complex that is leased by Dropbox is now being sold for $1.08 billion, which is the second-highest price in the city’s history for a single property.

On Monday, owner Kilroy Realty said it has agreed to sell the 750,000 square foot property for that rate. The huge deal would surpass all prior transactions, except for Boston Property’s $1.2 billion purchase in 1998 of Embarcadero Center. It is expected to close at the end of March.

Kilroy Realty has not named the buyer. However, a source familiar with the deal said it was KKR, a private equity giant. KKR did not immediately respond to a request for comment.

With the coronavirus pandemic having stalled San Francisco’s real estate boom, barely any major leases signed last year and several companies including Dropbox put in place a permanent remote work policy. Yet the Exchange is still appealing to tenants, including in the growing biotech sector as it can be used as a lab facility.

“This transaction demonstrates that quality assets in quality locations remain highly attractive to buyers and in this case generated a record price,” said John Kilroy, CEO of Kilroy Realty, in a statement.

Kilroy leased all of the office space to Dropbox in 2017, in what was the city’s biggest lease at the time. Facebook’s lease for all of Park Tower in the Transbay district set a new record the following year.

The Exchange sale follows the $650 million sale of the Transamerica Pyramid during the pandemic and a nearly $420 million deal last week for Uptown Station in Oakland, which is leased by Square.

“This is a resounding sign that people are still excited to be a part of San Francisco and its future,” Mayor London Breed said in a statement.

The Exchange’s annual property tax bill of about 1.2% will also increase to almost $1.3 million. It was assessed at $789 million in 2019, generating almost $9.5 million, making it the ninth-most valuable property in the Bay Area.

Kilroy is one of the biggest landlords on the West Coast and owns buildings leased by tech companies such as Adobe, Salesforce and Netflix.

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