Suburban renewal: Chesterbrook

Robert F. Whalen took a long road home to the Main Line. The Malvern Prep and Annapolis grad served two tours as a Marine officer in Iraq, worked for developers in Texas and in the Marcellus Shale gas fracking zone, sold a property to Chesapeake Energy Corp., and used proceeds to start his own firm, RW Partners, in 2011. He moved home, got involved in local government, ended up chair of the Tredyffrin Planning Commission.

That's where Whalen learned the banks were foreclosing on the giant Blackstone hedge fund group's $10 million mortgage on the largely-vacant Chesterbrook retail center (once home to a Genuardi's, still housing a Rite-Aid, Citizens Bank, Diane's Sidewalk Cafe). "I found the bank that was selling the mortgage, I got the mortgage under control, and resigned from the planning commission that day," Whalen told me. He might have stayed on, recused himself, let other planners decide. He says he wanted to avoid any suggestion of conflict of interest.

Whalen went partners with Brian McElwee, of Valley Forge Investment Corp., which owns local hotels: Crowne Plaza (King of Prussia), Embassy Suites (Chesterbrook), Omni (Philadelphia), the Golden Inn (Avalon.) "We got the zoning changes soon after," he 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." Tredyffrin supervisors' chairman Mike Heaburg confirms he's glad to see Whalen moving on his plan.

The Whalen-McElwee partnership has started prep for demolition and construction, Whalen says. "The first houses come out of the ground in mid-summer. We're moving tenants around. We need to get a 30,000-volt underground line and an 8-inch water line relocated." Three-quarters of the 120,000 sq. ft. complex will go. Ryland Homes (which owns the former Cornell Homes) will build 123 townhouses, wrapping around the consolidated, smaller store area, "the way it should have been designed from the beginning."

He figures the houses can sell in the $499,000-$650,000 range, accessible as they are to 202, Valley Forge, King of Prussia, the Turnpike slip-ramp, the Paoli Local trains to Philly a few miles south. "The real estate agents all say we're going to raise all the property values in Chesterbrook."

Homes, that close to the national park, look like "the highest and best use for that land," agrees Catherine A. Pullen, corporate managing director at broker Savills Studley in Philadelphia. Not another supermarket -- vs. the Trader Joe's in nearby Gateway, or the big Wegman's a couple exits over in Exton.

Offices rent faster (and higher) in Philadelphia, Radnor, Conshonocken and other mass transit hubs, says Pullen's colleague Tim Monahan. "You have to have a sense of place" to attract young college graduates, engineers, salespeople, he says. Attempts to create neo-urban hubs in places like Voorhees, N.J. have foundered. The pending departure of more than half the local operations of a major Chesterbrook employer, Shire Plc, will mean "a bloodbath in a vacant market," Monahan says. Chesterbrook has about as much office space as a 40-story Philadelphia tower; a third is currently vacant; Shire will make it worse.

Three-story buildings in the complex should attract new tenants, as Chesterbrook has before, when Vanguard, AstraZeneca and Weyerhauser successively departed, Pullen points out. Landlords like Bill Glazer's Keystone Property have "re-clad" aging suburban buildings with glass and new store spaces and drawn tenants, for example to Swedesford Road in Tredyffrin's Glehnardie section, she noted.

Who will come? Vanguard and QVC, Chester County's biggest white-collar corporate employers, haven't added net jobs in at least a decade. Pullen says landlords are looking East, to higher-tax districts like Upper Merion (King of Prussia) and Radnor.

If it turns out there's too much office space to go around, would the smaller Chesterbrook buildings make attractive home sites?

Dan Dagit CBRE svp. re Chesterbrook Corporate Center. "We don't plan to convert any office buildings to any other use," broker Dan Dagit, a CBRE senior vice president who's working with Chesterbrook Corporate Center landlords, told me. "There are two vacant buildings, and two more coming with Shire's move" -- and "we are very confident the buildings will lease up. There is an awful lot of interest." One would-be tenant is looking for a two-building complex to combine workers following a merger; at least four others are "looking to occupy a small building" thanks to their own "organic growth" recently.

A suburban office recovery? "It's not a trend yet. I think it's a turning point," concluded Dagit.