Kilroy Realty (KRC) Stock Forecast & Price Target

Kilroy Realty's positive outlook is supported by a noticeable recovery in foot traffic and occupancy rates, as evidenced by the 17% year-over-year increase at the Salesforce Tower, which remains a leading workplace in San Francisco despite being 25% below pre-COVID-19 levels. The company has also demonstrated strong renewal rates of approximately 5%, and management recognizes improving market dynamics, especially in San Francisco, indicating a potential rebound in demand. Additionally, the burgeoning interest in lab space, reflected by a 73% increase in demand in the Northern Peninsula submarket, reinforces confidence in Kilroy Realty's ability to successfully re-lease its San Francisco Bay Area properties.

Kilroy Realty's financial outlook reflects a negative sentiment primarily due to anticipated stabilization in West Coast office recovery, which may be adversely impacted by a decline in AI-driven demand. The company has revised its forward-looking funds from operations per share (FFOPS) estimates for 2026 and 2027 downward, indicating a weakening financial performance with projections at $3.49 and $3.78, respectively, compared to earlier estimates. Furthermore, persistent high vacancy rates in the broader office market, coupled with expected elevated deliveries and company-specific risks, contribute to a challenging near-term demand environment for Kilroy Realty.