By Natalie Kostelni – Reporter, Philadelphia Business Journal
Aug 28, 2019, 1:39pm EDT
Rubenstein Partners of Philadelphia has closed on buying Chesterbrook Corporate Center for $148.5 million and plans to plow another $50 million into the office park to bring the decades-old property up to contemporary standards.
Chesterbrook consists of 14 office buildings totaling 1.1 million square feet in Tredyffrin and is one of the biggest office parks in the Philadelphia area. The property was 80% leased at the time of the sale and that figure is expected to drop further when AmerisourceBergen Corp. vacates 200,000 square feet in 2021 and relocates to a new headquarters in Conshohocken. Pitcairn Properties was the seller. Robert Fahey, Jack Corcoran, Jerry Kranzel and Erin Hannan of CBRE Inc. arranged the transaction.
Rubenstein views the vacancy as a bonus to its repositioning efforts.
“We like having the opportunity to offer large blocks of space,” said Lou Merlini, a vice president Rubenstein. “We think that it is unique in the market since there are not a lot of large, contiguous blocks available. Our timing works, too, since it gives us a couple of years to execute on our capital plan.”
When Rubenstein buys large campuses, it creates a central amenity hub used by all tenants. In the case of Chesterbrook, it will likely convert one of the vacant buildings to serve that purpose. In addition, several pocket parks will be created throughout the property that will connect to the central amenity center.
The company also plans to improve the curb appeal, add wayfinding, renovate the interior of buildings and work on rebranding the office park. At what was once known as the Lower Makefield Corporate Center, Rubenstein dropped the “corporate center” moniker because it seemed dated and renamed the property Makefield Crossing. Merlini expects the Chesterbrook name will remain because of its history but will likely eliminate “corporate center.”
“What’s special about this place is that it is beautiful, green and you feel like you are in the middle of a park but you don’t feel connected or that there’s a sense of place,” Merlini said. “We want to create a much more sense of place and connectivity.”
The sale of Chesterbrook stumbled at first. Pitcairn put Chesterbrook and Glenhardie Corporate Center up for sale as a single portfolio in September 2018. Rubenstein put both under agreement in March only to back away from the deal. Glenhardie didn’t have enough scale that Rubenstein prefers when making acquisitions, Merlini said.
In the end, Pitcairn separated Glenhardie out of the deal and that office property was purchased for $30.5 million by Buccini Pollin Group of Wilmington, Del. Rubenstein then stepped back up to buy Chesterbrook.
The sale of Glenhardie, Chesterbrook, Makefield Crossing and pending sales of some other suburban office buildings such as 1000 Chesterbrook Blvd. and 200 Warner Road in King of Prussia means “suburban markets are finally starting to attract investment capital,” Fahey said. “The recovery came late to suburban office.”
More suburban office buildings are expected to hit the market over the next six months as investors chase well-leased properties, Fahey said.
Chesterbrook was developed on 140 acres in the 1980s by Fox Cos. It has a mix of residential, retail and office space and was pioneering for creating a community with a mix of uses. That approach has become more common as developers increasingly build live-work-play environments. The buildings Rubenstein bought include 851 Duportail Road, 600 Lee Road, 1300 Morris Drive and 725 Chesterbrook Blvd.