Oyster Point’s Second Phase Half-Leased As Kilroy Navigates Soft Lab Demand

Kilroy Realty’s Oyster Point life sciences project in South San Francisco

The second phase of Kilroy Realty‘s sprawling Oyster Point life sciences campus in South San Francisco is climbing uphill in a bid to fill space as the lab leasing market languishes.

Although the first phase of the 865K SF campus is 100% leased, the second phase, which was slated for stabilization in the first quarter of this year, is 49% leased and 7% occupied.

Olema Pharmaceuticals is among the tenants, signing a 38K SF, seven-year lease in Phase 2 in the second quarter.

There is interest in the rest of the unleased space, Kilroy CEO Angela Aman said during the company’s second-quarter earnings call Tuesday. A variety of users looking to lease large spaces are starting to dip a toe back in the market, she said. 

“While lease execution timelines remain elongated, it is difficult to predict with certainty which transactions will ultimately materialize and in what time frame. We are optimistic by the overall level and quality of life science demand in the market,” Aman told investors.  

Life sciences tenants made up 19% of Kilroy’s portfolio by rent in the second quarter and 17% by square footage in both lab and office space. Tech tenants still make up almost half of Kilroy’s base by rent and square footage. 

During the second quarter, Kilroy signed roughly 376K SF of new and renewal leases across its life sciences and office portfolio, including a 51K SF lease with Universal Music Group at the Santa Monica Media Center on Colorado Avenue in Santa Monica, which pushed that project to 100% leased.

“Specifically what we’re seeing in the South Bay down through Long Beach in terms of defense, aerospace, robotics, those kinds of uses, has been really exciting and encouraging as well,” Aman said. 

In Los Angeles, Kilroy has just over 1M SF of leases expiring next year, roughly the same amount that is expiring this year. Kilroy said its retention rate last quarter was 27.9%, down from 32.5% in the same period in 2025. 

One of the largest expirations coming up for Kilroy is the nearly 533K SF DirecTV rents in El Segundo, made up of leases slated to expire this year and next, with the bulk expiring in 2027. 

DirecTV sued Kilroy in 2021 to get out of part of its lease at this Kilroy property, but Aman said Kilroy was exploring an array of options for the property and hadn’t ruled out the possibility that DirecTV might re-lease it. 

“We feel like things are moving in the right direction in that market, either for re-leasing or for a disposition,” Aman said. 

Overall, Kilroy’s stabilized portfolio was 77% occupied and 81.5% leased at the end of the second quarter, down from 80.8% and 83.5%, respectively. 

Things are also still up in the air for Kilroy’s Flower Mart mixed-use project in San Francisco. The company continued discussions with the city of San Francisco on possible plans for the property, where it was approved to develop approximately 2.5M SF. Kilroy presented four options in September, the San Francisco Business Times reported. 

With the San Francisco office market’s meteoric rebound and the apartment rent increases that have followed, Kilroy is maneuvering to ensure that the final use mix at the site capitalizes on the shifts by including possible residential uses in its framework.