Largest Tysons Landowner to Sell Holdings
WestGroup Withdraws as Major Force in Prominent Redevelopment Project
Friday, July 17, 2009
WestGroup, the largest landowner in Tysons Corner and the powerhouse of a massive redevelopment effort in Virginia's largest job center, confirmed last night that it is selling its 142 acres there to an investment group led by McLean developer Robert Pence.
The sale will abruptly remove WestGroup and its charismatic leader, Gerald T. Halpin, from one of the nation's most closely watched redevelopment efforts. Construction is underway in Tysons to extend Metrorail from Falls Church to Dulles International Airport, a public works project that is expected to transform the aging and traffic-choked community in Fairfax County into a downtown to rival Washington's.
WestGroup declined to discuss terms of the sale. But the company's Tysons portfolio is probably worth $500 million to $800 million, said Greg Leisch of Delta Associates, a real estate research company. That would make the sale one of the largest in the region in recent years.
Pence, president of Pence-Friedel, could not be reached for comment last night. Pence-Friedel, founded in 1984, has developed major commercial projects across the country, including the Dulles Expo & Conference Center in Chantilly. The company plans to break ground in 2011 on the largest development in Augusta County, a hotel, shopping and entertainment complex about 100 miles from Richmond along Interstate 81.
Over 47 years, Halpin has been an engine of Tysons Corner's growth into a sprawling suburban office park. He built an empire of office towers on what were two dairy farms he bought with a group of partners in 1962. Tysons now draws 100,000 workers to its offices.
WestGroup stood to benefit from the higher densities Fairfax officials envision on land near the four Metro stations planned for Tysons, in particular several acres the company owns directly next to the planned Tysons East Station at Route 123.
Some real estate observers wondered about the timing of the sale, because the recession has dragged down real estate prices. Many commercial property owners are carrying debt and have been forced to refinance or sell their properties.
Sources close to Halpin said he is pulling out for personal reasons: He turned 87 this year and a recent health scare prompted him to shift his priorities to philanthropic pursuits. He began to entertain potential buyers and was intent on selling to a developer with roots in Fairfax, said the sources, who asked to remain anonymous because there has been no public announcement. They said he has a long friendship with the Pence family.
"He thinks this is the time, while he is still vibrant, to pass the torch to another family with local roots," said Mark C. Lowham, a senior vice president at West Group. None of Halpin's three children joined the family business.
Executives from both companies began briefing Fairfax County supervisors on the sale this week. They told the officials that they do not envision major changes to WestGroup's vision of stores, offices and densely packed apartments and townhouses in the redeveloped Tysons Corner.
"Does it mean a change in focus? I don't think so," said Board of Supervisors Chairman Sharon Bulova (D). "This is family that is interested in seeing the vision of Tysons realized."
The WestGroup owns about 140 office and apartment buildings in Tysons. Its office properties have as much as 2 million square feet of space available, according to the company's Web site.
WestGroup developed two major pieces of Tysons Corner's current landscape: WestPark, outside the Capital Beltway, and WestGate, inside the Beltway. The company's buildings are home to major companies, including Freddie Mac, Mitre and Northrop Grumman.
The company sank $3.5 million into TysonsTunnel.org, the group that fought unsuccessfully to have the Tysons segment of the proposed Dulles rail extension placed underground
Staff writers Amy Gardner and James Hohmann and staff researcher Meg Smith contributed to this report.