Kilroy Realty (KRC) Stock Forecast & Price Target

Kilroy Realty Corp. is well-positioned for future growth due to a recovery in the office market, particularly in San Francisco, where the company has reported encouraging dynamics and increased foot traffic at key properties. The company's management has noted a significant 73% sequential increase in lab demand in the Northern Peninsula submarkets, with a focus on re-leasing opportunities linked to growing AI demand. Additionally, Kilroy Realty's recent attractive renewal rates of approximately 5% reflect a resilient tenant base, suggesting confidence in its ability to maintain occupancy and drive revenue in the coming quarters.

Kilroy Realty faces a challenging outlook primarily due to potential stagnation in office recovery, particularly in West Coast markets, which may be exacerbated by a downturn in AI demand. This concern is compounded by land monetization issues, leading to downward revisions in the company's 2026/2027 funds from operations per share (FFOPS) estimates, which have decreased from $3.67/$3.89 to $3.49/$3.78. Furthermore, the overall office market continues to grapple with significant vacancy rates and a near-term backdrop characterized by weakened demand and higher delivery expectations, suggesting ongoing difficulties for the company.