Friday, April 15, 2011

Aegon HQ site to get a revamp

by Natalie Kostelni
"A partnership plans to redevelop a vacant two-building office complex here once occupied by Aegon Group and market it as a prospective headquarters to companies seeking to have a ready-made campus setting with room to expand.

E. Kahn Development Corp. and J. Loew & Associates Inc., both of Downingtown, in conjunction with Aegon, an international life insurance and pension company with a local presence, will take on the project at 20 Moores Road and spend an initial $8 million to totally redo the exterior of the 236,704-square-foot complex. Four additional buildings can be constructed on the 65 acres and in all more than 500,000 square feet of space can be developed. Approvals are already in place for any new office construction.

“We’re elephant hunting,” said Eli Kahn, one of the developers involved.

Several large tenants are searching for space in the western suburbs and the market is getting tighter when it comes to available large, contiguous blocks of space. The market is also starting to show other favorable signs with a positive net absorption of 295,900 square feet of space and a slight drop in the overall vacancy rate to 21 percent from 21.5 percent, according to first-quarter data.

The submarket where the Aegon sits in is showing overall negative absorption, according to the Smith Mack research. The Malvern-Exton-West Chester area saw a negative net absorption of 48,600 square feet in the first quarter compounded by the negative net absorption of 33,820 square feet during the fourth quarter. Overall vacancy rates are also on the rise, climbing to 23.3 percent and rental rates are down to $19.78 a square foot.

That doesn’t deter Kahn, who believes there is a need in the market for this type of project.

“I’m not interested in competing with all of the space in Great Valley,” Kahn said. “We’re looking for a company that wants its own building but not in a corporate park.”

Parts of the office market are in a state of flux and that may affect demand for a development such as this.

Sanofi Aventis has announced plans to vacate space in Great Valley Corporate Center, Vanguard Group is looking to buy nearby office buildings, and with Cephalon Inc. a takeover target, additional space could crop up. In fact, Cephalon occupies space next door and across the street from the Aegon parcel.

The existing two-building complex was originally constructed for National Liberty Life Insurance in the early 1970s when that part of Chester County was still rural. It was designed by renowned architect Vincent Kling and an interesting feature is the steel used to frame the building is exposed on the exterior. While the steel beam facade was different and blended into the wooded landscape, the beams rusted instead of turning an attractive patina. They stained the windows. It also gives the building a dark, dated look.

The design also complemented the landscape in other ways. For example, the two connected, four-story buildings were raised to allow a pond-fed stream to run underneath them as well as to give occupants windows with sight-line views into surrounding woods.

Over the years, National Liberty morphed into Aegon and the company installed new mechanical systems in 1998-99 but left the exterior untouched. Kahn plans to put a new facade on the building. A design by Bernardon Haber Holloway Architects shows the exterior steel beams covered with a sleek glass wall. The interior of the space will be revamped once a tenant has been secured. Kahn will also wait to go full bore on the exterior redevelopment after gauging tenant interest.

Aside from the office buildings, the property includes an existing 5,700-square-foot guest house called “Ashlawn,” as well as a 4,600-square-foot training center. At one point, 1,400 Aegon employees worked from Moores Road.

Aegon vacated the buildings four years ago when it leased 90,000 square feet in a newly constructed building at 300 Eagleview Blvd. in Exton. It signed a 10-year lease on that building, which was developed by Kahn. At the time, the company didn’t know what it was going to do with the property but retained ownership of it."

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