Kilroy 1Q16 Earnings Call Notes

John Kilroy

fundamentals in our markets remain healthy

” Four months into the New Year fundamentals in our markets remain healthy. Rental rates and net absorption continue to increase, while vacancy rates continue to decrease in the innovation driven sub markets of San Francisco, Seattle, Los Angeles, and San Diego.”

You may see a few fewer bidders, but pricing has remained very strong

” You don’t see as many bidders at some of the really core, real Class A sales. Although you still see a dozen or so and then it generally narrows down to two or three in the final round. But pricing has remained very strong. If you look at land, lands being acquired — there is not much acquired in San Francisco, down in the Valley, Mike, it’s very robust, the pricing is strong.”

Construction costs in Silicon Valley have spiked primarily because of labor

“The thing that we’re look at right now is construction costs which have spiked, it’s basically a labor driven. Down in Silicon Valley right now labor costs were up considerably. How long you’ll stay that way we don’t know. We’ve been able to manage cost to where we forecast generally about 5% per year, and we’ve been able to as we mentioned, we had savings on the two buildings we just delivered. But all those factors you have to really keep control of and if you have a project that is you’ve got to start soon, you better make sure you have forecasted your cost correctly”