Arborcrest in Blue Bell nears final phase of its $120M redevelopment

Corporate Office Properties Trust is closing in on the final stages of the transformation of Arborcrest, its office campus in Blue Bell, Pa.

The company began redevelopment of what was the former Unisys Corp. complex in 2008 when it embarked on what will be a $120 million effort to reposition the property once occupied by a single tenant — Unisys — into a series of modern office buildings that would attract top tenants and top rents. So far, the company believes it has accomplished what it set out to do.

"We have absolutely had tremendous success with that marketplace," said Steve Budorick, chief operating officer at COPT of Columbia, Md. "It is a combination of tremendous product strategy and a very effective redevelopment and marketing team. Our value proposition of delivering very contemporary, well lit space that appeals to the Millennial work culture at a competitive price point has been effective."

Rents run in the high $20s a square foot and the roster of tenants at Arborcrest include Coredial, McGladry, Integrated Project Services, PRA Health Services, Annodyne Inc., Brokerage Concepts Inc., Mayo Seitz Inc. and others.

For decades, Unisys occupied about 960,000 square feet at the 137-acre property at Union Meeting Road and Penllyn Blue Bell Pike in the Blue Bell section of Whitpain. Unisys significantly shrank down to 180,000 square feet, giving COPT an opportunity to revamp structures on the property. It first completed Lakeside I, a 219,000-square-foot building at 801 Lakeview Drive that is now occupied by Unisys and McDonald's.

The real estate company then tackled a massive building it cut up into three structures — Hillcrest I, II and III — with a courtyard in the middle.

"We removed square footage to create the three buildings and to break the project down into more manageable redevelopment chunks," Budorick said.

Hillcrest I, a 115,700-square-foot building at 751 Arbor Way was carved out and completed by the first quarter of 2012. Hillcrest II, a 178,100-square-foot building at 721 Arbor Way, was built out by early 2013; and Hillcrest III, a 138,500-square-foot building, is scheduled to be completed sometime this quarter.

Three leases are in negotiations now and, once wrapped up, will mean the entire 651,300 square feet of redeveloped space - on which it spent $92 million - will be fully occupied.

It will also mean the eventual kick off of the final phase, the redevelopment of what is called Woodlands I, a 219,000-square-foot building.

COPT plans to spend roughly $28 million to re-do that structure and is still finalizing its plans.

"We have an extraordinarily exciting design for that," Budorick said.

Among its preliminary plans are reducing the square footage of the building to 190,000 square feet, opening up the building so it has enhanced view corridors and will adorn it with a sleek glass facade. The company hasn't determined whether to move forward with the project on speculation or wait until it has pre-leased a portion of it.

"We have a lot of interest in the building and there's a very good possibility we will have 33 percent pre-leased but it's well within the realm of possibility to go speculative on that project sometime this year," he said.

While there's undeveloped land upon which COPT could construct a parking structure and three more buildings totaling more than 380,000 square feet, Budorick doesn't think the company will move forward with those plans given the community worries about increased traffic in the area. "We're redeveloping what's already there and making that project 13 percent smaller than it was when we started and with much higher quality buildings with better architecture," Budorick said.

Once its done with Woodlands I, which it estimates will be sometime next year, COPT plans to hold on to Arborcrest. The company, heavily dependent on the government and defense contractors as tenants, Arborcrest diversifies its portfolio with a mix of tenants and geographically.

"We're thinking it could be a long-term hold," said Budorick, who hasn't ruled out expanding its Philadelphia-area holdings.

Source: Philadelphia Business Journal