John Kilroy Jr. thrives on a good challenge. The chief executive of Kilroy Realty Corp. has weathered the last two tumultuous decades in the real estate industry and grown what was once a small family-owned development company into the largest publicly traded real estate investment trust in the western United States. This year alone, acquisitions have increased the company’s portfolio by one-quarter to15.5 million square feet. It now owns and manages 145 buildings from San Diego to Seattle, and recently closed the state’s largest office lease in a decade: a 720,000-square-foot lease for satellite TV provider DirecTV Inc. in El Segundo. But Kilroy doesn’t keep his competitive spirit relegated to the business world. The 62-year-old Malibu resident has set world records in several of the world’s most competitive sailing races. He’s also actively involved in the New Majority, a GOP political action committee. Kilroy sat down with the Business Journal at his West L.A. office to talk about why his business is booming in a soft real estate market, what Los Angeles needs to do to be more competitive and how he met the king of Spain.

Question: How have you been able to grow your company during the recession?

Answer: We are active in all the major West Coast high-tech markets: San Diego, Orange County, Los Angeles County, San Francisco Bay Area and the Puget Sound-Greater Seattle area. If you think about where the country is gaining jobs significantly, it’s in the high-technology, brain-power areas with knowledge-based companies.

How have you been able to expand?

We pay cash for almost everything we buy, so that makes it simple. In San Francisco, we didn’t own an asset a year and half ago and now we are the second largest landlord in the area south of Market Street, which is the No. 1 office market in the country today. We own more than 2 million square feet in that market and are 99 percent leased.

What about Los Angeles?

We own several million square feet here (in greater Los Angeles), but in the city of L.A., we don’t own very much. We aren’t downtown. We have this (company headquarters) project and (building) on Wilshire Boulevard. We will own more in the county. We are in escrow on things now.

Where is the local market the strongest?

You have a lot of technology and media in Santa Monica, West L.A. and El Segundo. El Segundo had long been the tech capital of the West Coast because of the aerospace and defense industries that spawned a lot of these technologies.

What would improve the L.A. market?

The city of L.A. is one of the more unpredictable places to do businesses. Think what the cost is in time and money. And if you don’t have the infrastructure and public transportation and the amenities knowledge-based companies want, they’ll go to an alternative. L.A. can do a much better job.

How did you get involved in the family company?

I worked for (my father) in the summers and holiday vacations initially sweeping out warehouses. I was a watchman in a medical office building he developed in Newport Beach in high school. In college, I worked in the office and had intended to go to law school.

Oh, really?

That’s what I wanted to do. My dad was a strong personality and I was a strong personality and I thought, “We’ll just do different things.” I was interested in economics and math, and I thought that would be a career in the law.

So what happened?

I had been working in college for him for three or four days a week. I had the opportunity to get involved in some assets that no one paid any attention to. I was able to figure out some ways to move those off the books and make them profitable. I also found myself working on multimillion-dollar lease transactions and I got hooked.

You said your father had a strong personality. Tell me about him.

My father, who will be 90 on May 1, is a very bright guy. He only went to college for a year or so before the war broke out. He joined the war by becoming an inspector at Douglas Aircraft Co. and came out with a wife and brand-new baby.

How’d he get into real estate?

At Douglas Aircraft Co., he wrote a paper on the rate of rejection and the correlation of the workplace environment. Simple things like good lighting, good ventilation, whatnot, and you would have a lower rate of rejection on whatever was being manufactured. He thought, “I’m going to put some of those things that I learned at Douglas to work.” So he cobbled together some money and a construction company, and that’s how he became a developer.

What was your childhood like?

I was born in Santa Monica at Saint John’s Hospital. I grew up mostly in Orange County, Palos Verdes then Newport Beach. Then after college at USC, I moved back to L.A. County and ended up in Malibu.

What was it like to take over for your father?

I got involved in running the company back in 1989. We got hit like everybody else did in the late ’80s, early ’90s with the wipeout that was going on in the real estate business. I had a different opinion about how we ought to be organized and that’s why we became public in 1997, and began expanding into different markets, product types and capital sources. We were very dependent on the aerospace defense industry back in the ’70s and ’80s.

How did your father feel about that?

One thing my father used to say is you’ve got to believe in revolution. When you evolve you can only get so far and then there are diminishing returns. In revolution, we have new products, new technologies and we constantly need to be thinking how do we get to the next step.

How does it feel to grow the company larger than your father did?

I don’t think of it as a competition in that sense. It’s the natural order of things. You need to, unless you’re a passive investor. If you’re an active partner, you either expand or you contract or you go away.

What did you learn from your dad?

I learned that sort of thinking, “You can do it.” Our family is very sports oriented. My father was a world-class sailor, and I’ve won many world-class championships with my father. Sailing, it’s all about a team. And sometimes in life-threatening situations you really want to make sure you have the right team to win, to stay alive and keep the boat afloat. In a company, it’s very much the same.

How’d you begin sailing?

I started sailing when I was 3 with my father. We went to Catalina, the Channel Islands, up to Santa Barbara. I started doing long-distance races to Hawaii and Mexico, and in Europe. As years went by, my father, who had a number of boats called Kialoa, and I sailed the Sydney-Hobart race, which is considered the roughest race in the world. We’ve won it a couple times and set the record for 22 years back in ’77.

What was the most exciting race?

In 2009, we did something in the Transpacific from L.A. to Diamondhead and we did something only three or four other boats have done in the 110-year history of it, which is what they call a clean sweep: We were the first boat to finish, first in class and first on handicap overall. We were the smallest boat to have done it and it was a fantastic win.

Any other adventure stories?

Years ago, a month before we won the world championship in Palma de Mallorca, we raced in Copa del Rey, which means the King’s Cup, and were in second in our event. Spain’s King Juan Carlos and Queen Sofia and the prince presented trophies to winners and we came up to this beautiful section of an old town. We brought our whole crew and four of my six kids with me. That was a lot a fun in sailing.

Tell me about your boats.

I’m racing boats that are 32-foot, very high-speed, eight-man boats (known as Melges 32). My boats are called Samba Pa Ti, after the Carlos Santana song.

Why?

It’s one of the most beautiful love songs ever. It’s an instrumental song, and it’s absolutely beautiful. There’s something about that song to me. It’s just, I don’t know, it resonates throughout me. What’s interesting is my wife, Catherine – she was captain of the sailing team at Brown and she’s a terrific dinghy sailor and fantastic athlete – when I met her, I asked her what her favorite song was and she said “Samba Pa Ti.” That was pretty amazing.

Tell me about your wife.

Catherine is the most amazing and brilliant woman I ever met. Her mother is Flemish. She worked in business in the medical device industry and now is very involved in a number of philanthropic organizations.

How did you meet?

We met after the ’99 sailing world championship in San Francisco. I had rented a house and was fortunate to win. I invited the team that was the world champions in ’98 for dinner. One of the other guys on that same sailing team was married to Catherine’s best friend. He invited Catherine to dinner that night, she walked in and that was it.

You were married before, right?

I don’t want to get into that. I have three fantastic children from my first marriage. I’d rather just say I’m happily married and she’s one of the guiding forces in my life.

What else do you like to do?

I love mountain biking. It’s one of the greatest sports in the world. You get to be as adventurous or technical as you want to be. There’s nothing like being in the Santa Monica Mountains overlooking, on a beautiful February day, the Channel Islands and snow-covered peaks.

You seem like you travel a lot.

My wife is half-European, half-American-Flemish from Antwerp. So we go each year to Belgium and to a house in Italy. I’ve been fortunate over the years to travel to quite a few places in the world with sailing or surfing or other sports.

Do you have a favorite location?

I really love the mountains in Utah. They are beautiful. I think they’re fantastic for hiking, skiing and snowboarding. But sailing in San Francisco has got to be one of the most wonderful venues.

Let’s switch gears. Tell me about your involvement with the New Majority.

The New Majority is a centrist Republican PAC here in California. I’ve always been involved in politics, not just for Republicans but trying to elect people who have good economic policy. That’s what’s needed in today’s world: people to come together on good economic policy and closing out (our) budget problems – and in other countries.

Where do you stand politically now?

We have got to get beyond Republican and Democrat, pro this and anti that. Let’s assume for a second that the environment we are in today is a lot like when you are sailing. We are all on the boat and are in a terrible hurricane. Do you think we are spending time talking about pro this? We are all putting our backs in to bring the boat to calm waters. When we get there we can fight about pro this and anti that.

What would you do about the budget?

We have to massively reduce our expenditures and we have to increase our revenues. To do the former we need to, like you would in any household or company, look at our priorities. How do you buy those services as efficiently as possible and eliminate those that are unnecessary? On the revenue side, just like people go get other jobs, the most true tested way is to have an environment in which there is growth.

Would you pay more taxes?

I’d be willing to pay more taxes if I thought it would solve the problem and not just evaporate in the status quo.

So how do you change the status quo?

I think ultimately there is going to be a need to adjust taxes to encourage more growth. At the same time, we do have a progressive tax system in the country and I’m fine with that. But frequently the argument is we need more taxes. We need reform, total reform that makes us more efficient in our cost structure. (Reform) would add predictability for individuals and corporations, and provide more certainty to states and local communities that rely on it.

Would you run for office?

People ask me all the time but I have other things I’m committed to.

I take it your children are a big part of your life.

My oldest is a college professor in New York in art history. My second girl just came back from Peru, where she was taking treks with a travel agency to Machu Picchu in the high Andes. My oldest son is a senior at George Washington University, and majoring in international business and Chinese language. At home, they are 10, 8 and 4 in Malibu. Everyone is into languages and music, sailing and sports.

Will your children follow in your footsteps?

My daughter (recently back from Peru) is going to be working for us in San Francisco. She worked as an intern over a number of summers, and was working in our marketing operations and will get involved in assets.

Any other ones?

Not at this point, but I’ve got my eye on a couple of them. They are all very smart and very capable kids, so obviously I’d love to have more than one or two work with me. They will have the opportunity to intern here or with others. (But) I believe that children will find their own path.

What’s the biggest lesson you’ve learned in life?

Nobody has all the answers. No matter how bright you are or how enthusiastic you are, there’s a lot of folks with fantastic ideas. Don’t be so focused on the way you’ve done things in the past. There’s new technology, and it’s amazing in the world today.

JOHN KILROY Jr.

TITLE: Chief Executive

COMPANY: Kilroy Realty Corp.

BORN: Santa Monica; 1948.

EDUCATION: Bachelor’s, economics, USC.

CAREER HIGHLIGHTS: Converting company from private to public in 1997; hiring Jeff Hawken as an intern and watching him grow to No. 2 in the company.

MOST INFLUENTIAL PEOPLE: Father John Kilroy, mother Grace West; high school literature teacher Mr. Sims; father-in-law Dr. Bill Bank.

PERSONAL: Lives in Malibu with his wife, Catherine, and three young children; three adult children from previous marriage.

ACTIVITES: Sailing, snowboarding, mountain biking.