Swinerton In the News

Swinerton Builders: February 06, 2014

Dropbox bags second building for SoMa campus

Dropbox keeps rolling on Brannan Street.

Dropbox keeps rolling on Brannan Street. Less than 48 hours after the cloud storage company signed a lease to take the entirety of 333 Brannan St., a five-story building Kilroy Realty Corp. will start building immediately, the startup has completed a deal to take an adjacent building as well.

Dropbox has made a 12-year commitment to lease the 345 Brannan St., a 115,000-square-foot building that a different developer — Breevast — will break ground on in the next few weeks, just to the west of 333 Brannan St. The cofounder and CEO of Dropbox is Drew Houston.

Between the two buildings, Dropbox will have a brand-new 295,000-square-foot campus in the historic South Beach neighborhood. Dropbox also recently doubled its space at China Basin — at 185 Berry St. — growing from 90,000 square feet to 180,000 square feet. Once all the space is completed, the company will occupy a total of 475,000 square feet sometime in 2015.

Both buildings are slated for a 2015 completion. While the two projects have separate ownership, Breevast and Kilroy are coordinating construction.

The Business Times reported last week that Breevast, an Amsterdam-based investment and development company, planned to start building the five-story building that will replace a 95-space surface parking lot. The building is being designed by Charles Bloszies Architecture and built by Swinerton, which is also the general contractor for the other Dropbox project.

The buildings will share a courtyard — the entrances of the two buildings will face off across the plaza.

Real estate attorney Tony Natsis of Allen Matkins, who represented both Breevast and Kilroy, said the two-part transaction was unusual.

“You’ve got two unrelated landlords, who are not joint venture partners, cooperating with each other, and entering into transactions that were separate, but almost simultaneous,” said Natsis. “These are two radically different companies that didn’t really know each other.”

In an earnings call, Kilroy CEO John Kilroy said rents were close to $50 net, which puts it above $70 a square foot gross.

Natsis said the transactions bode well for the next generation of development leases, including 535 Mission St., the Transbay Tower, 181 Fremont St. and 222 Second St. The Business Times reported that Trulia is in talks to take about 100,000 square feet at 535 Mission St.

“With 535 Mission coming out of the ground, and the glass going on, that thing should be on fire,” he said. “It doesn’t need to be exposed brick and timber any more, it just needs to be in the right place because these guys want to crawl all over each other. They want to be in SoMa. They want to be on Mission Street, so they can draw from the same talent pool.”

Mike Brown and Bill Benton of Cornish & Carey Newmark Knight Frank have the listing. Tim Kazul, Luke Ogelsby and Laurence Morgan of CBRE represented Dropbox.

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