Kilroy Realty Reports Stronger Leasing, Revised Outlook for Major Development

The real estate investment trust sees improved office demand across its West Coast markets, but updates cost and yield expectations for its Kilroy Oyster Point Phase Two project.

Published on Feb. 10, 2026

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Kilroy Realty Corporation reported fourth-quarter funds from operations of $0.97 per diluted share and highlighted improved leasing conditions across its West Coast markets, continued portfolio recycling, and updates on two major development projects that will impact 2026 results. The company saw its strongest fourth-quarter leasing in six years, with 827,000 square feet of new deals, and cited the 'healthiest level of office demand since 2019.' However, Kilroy revised the expected stabilized cash yield for its Kilroy Oyster Point Phase Two project in South San Francisco to the mid-5% range, about 100 basis points below original underwriting.

Why it matters

Kilroy's results provide insights into the state of the office market on the West Coast, where the company has a significant presence. The improved leasing activity and demand trends suggest a recovery in office space, though the revised outlook for the Kilroy Oyster Point Phase Two project highlights the challenges developers still face in some markets. The company's capital recycling efforts also demonstrate its efforts to reshape its portfolio.

The details

Kilroy reported strong fourth-quarter leasing, including a 93,000-square-foot new lease with Fitler Club at Columbia Square in Hollywood, a 79,000-square-foot renewal with Riot Games in West Los Angeles, and 74,000 square feet of new long-term leases at West 8th in Seattle. In San Francisco, the company cited continued AI-related leasing and a growing pipeline for spec suite space under construction. However, Kilroy updated cost and return expectations for its Kilroy Oyster Point Phase Two project, with an anticipated stabilized cash yield in the mid-5% range, about 100 basis points below the original underwriting. The company also continued its portfolio recycling efforts, selling assets in Hollywood and San Diego.

  • Kilroy reported fourth-quarter 2025 results on February 11, 2026.
  • The company closed the sale of Kilroy Sabre Springs in San Diego in January 2026.
  • Kilroy expects the Kilroy Oyster Point Phase Two project to enter the stabilized portfolio in January 2026.
  • The company expects capitalization of the Flower Mart development to cease at the end of June 2026.

The players

Kilroy Realty Corporation

A publicly traded real estate investment trust focused on the development, acquisition, and management of high-quality office and mixed-use properties along the U.S. West Coast.

Angela Aman

Chief Executive Officer of Kilroy Realty Corporation.

Rob Paratte

Chief Leasing Officer of Kilroy Realty Corporation.

Eliott Trencher

Executive Vice President and Chief Investment Officer of Kilroy Realty Corporation.

Jeffrey Kuehling

Chief Financial Officer of Kilroy Realty Corporation.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

The takeaway

Kilroy Realty's results highlight the improving office demand on the West Coast, with the company seeing its strongest fourth-quarter leasing in six years. However, the revised outlook for the Kilroy Oyster Point Phase Two project underscores the ongoing challenges developers face in certain markets. The company's capital recycling efforts also demonstrate its efforts to reshape its portfolio to capitalize on emerging trends.