Kilroy Realty, the owner of office and residential properties in California, Washington and Texas, plans to focus on leasing instead of starting new building projects through the end of the year.

Executives said on a second-quarter earnings call that the Los Angeles-based company will be well positioned when there's demand for high-quality office space, which it owns. They added there will be a need for this type of real estate as construction of new offices slows.

Office construction has fallen more than 12% year over year nationally and building starts this year also have shrunk, according to CoStar data.

"As demand for high-quality space surges, there's currently little new product in the pipeline to be delivered over the near term, creating a future shortage of high-quality product that tenants want," President Justin Smart said on the call.

Kilroy itself isn't speeding development plans. The company expects to have $1 billion in its in-process development pipeline next year, the smallest amount since 2016, Smart said. All three current pipeline projects are related to life science.

Still, the company has eight development projects in the works that aren't currently under construction totaling roughly 8 million square feet, Smart said. The projects are a mix of office, life science and residential. Kilroy executives didn't say when those projects would kick off.

CEO John Kilroy said Kilroy's primary focus on the rest of the year will be leasing as he's seeing office conditions improve. In April, Kilroy said he was seeing more workers return to the office as companies determined that there are inefficiencies involved in remote work.

Now, Kilroy said he's hearing from tenants that that have moved out of buildings that want to lease space again. And he said that properties that Kilroy owns, like Columbia Square in Hollywood, are seeing leasing momentum after years of inactivity.

To that end, Kilroy inked two lease deals at its roughly 469,600-square-foot Columbia Square at 1525 N. Gower St., including a renewal and expansion for a company related to basketball star LeBron James for roughly 50,000 square feet. In total, Kilroy announced it completed roughly 285,000 square feet of new and renewing leases in the second quarter.

Beyond Hollywood, Kilroy said he's also seeing signs of demand at Kilroy properties in Seattle and in the Bay Area. Kilroy said San Francisco is turning things around but acknowledged there's more work to be done for the city that has had a high office vacancy rate and increased concerns for safety in parts of the city.

"If you've ever been involved with an intervention of somebody who's an alcoholic or drug addict, you're not going to get any place unless they hit bottom and want to change. That's the way I'd characterize San Francisco," Kilroy said. "The winds are definitely changing."

Kilroy plans to step down from the CEO role at Kilroy at the end of the year after serving in that role for nearly three decades.