PhillyDeals: Plans for developing Chesterbrook site don't include offices
Robert F. Whalen was chairman of the Tredyffrin Township planning commission in 2013 when he heard that an affiliate of the Blackstone Group, the big hedge-fund manager, had decided it wasn't worth paying the $10 million it owed for its half-empty shopping center at Chesterbrook, just south of Valley Forge National Park.
Robert F. Whalen was chairman of the Tredyffrin Township planning commission in 2013 when he heard that an affiliate of the Blackstone Group, the big hedge-fund manager, had decided it wasn't worth paying the $10 million it owed for its half-empty shopping center at Chesterbrook, just south of Valley Forge National Park.
That's when Whalen, a Malvern Prep and U.S. Naval Academy grad and a Marine officer who did two tours in the Middle East before he turned developer in civilian life, made an executive decision:
"I found the bank that was selling the mortgage, I got the mortgage under control, and resigned from the planning commission that day," he told me. He wanted to avoid conflicts of interest.
Whalen went partners with Brian McElwee, of hotel manager Valley Forge Investment Corp., and hatched a proposal to level three-quarters of the 120,000-square-foot Chesterbrook store space and replace it with 123 half-million-dollar-plus townhomes.
"We got the zoning changes soon after," Whalen told me. "Because of my relationship with the township, I knew the township wanted to see the center improve from the eyesore it had been."
Whalen and McElwee figure that the development will cost about $85 million. They're talking to lenders. Tredyffrin supervisors' chairman Mike Heaberg confirms he is glad to see they have started prep work at the site, moving underground electric and water lines.
The plan is to accommodate surviving merchants, which currently include Citizens Bank, Rite Aid and Diane's Sidewalk Deli. The townhomes, to be built by Ryland Homes, will wrap around the new store area - "The way it should have been designed from the beginning," Whalen says.
That's probably the best use for that land, in this market, said Catherine A. Pullen, corporate managing director at office broker Savills Studley in Philadelphia.
Not offices? It's gotten tougher to rent suburban space, says her colleague, Tim Monahan.
The pending departure of more than half the local operations of a major Chesterbrook employer, Shire Plc., will boost office vacancies.
Who will fill that space? Chester County's biggest corporate employers, Vanguard and QVC, haven't added net jobs in a decade. Pullen says local landlords are looking east, to lure offices from higher-tax Upper Merion (King of Prussia) and Radnor.
Has it gotten to where vacant Chesterbrook offices may end up demolished, like the stores, to make way for homes?
"We don't plan to convert any office buildings to any other use," broker Dan Dagit, a senior vice president at CBRE, which represents Chesterbrook Corporate Center, told me.
There's a lot of tenant interest, he says, in four vacant or soon-to-be vacant buildings. Dagit says he's fielded recent calls from one company consolidating operations after a merger, and four others looking for small buildings to manage staff from their recent business growth.
"It's encouraging," concluded Dagit. "It's not a trend yet. I think it's a turning point."
Update 12/3: The column incorrectly referenced a CVS drugstore in the center. It is actually a Rite Aid.
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