BENSALEM, PA-O’Neill Properties Group has broken ground for the first of six class A office buildings at Horizon Corporate Center. This second phase of development on the 101-acre former Eastern State School and Hospital site will contain 1.2 million sf, all built to LEED specifications.

That will make Horizon II the largest green development site in suburban Philadelphia, according to Brian O’Neill, founder and chairman of the King of Prussia-based company. The total construction cost is estimated at $250 million, Richard Heany, EVP of acquisitions and divestitures for O’Neill, tells, and he expects it to be fully built out by late 2012.

It begins with a 200,000-sf building, which is expected to reach completion within 12 months. Its projected construction cost is $50 million, Heany says. The developer is in “active negotiations for 75% of the space,” he says, “but we can’t yet divulge tenant names.” Leasing is handled in house, and the asking rent rate is $28.50 per sf. “Other new construction in this area is asking north of $30 per sf,” he says. “Because we construct and manage our properties, we can cut out layers and require lower rates.”

The premium for going green adds between 3% and 5% to construction costs, according to Heany. “We recover it in two places,” he says: “in energy savings and in speed of lease up. When tenants are looking at competitive product, LEED certification checks another box in what they desire.”

The five other buildings in the center will range from 80,000 sf to 496,000 sf. In addition to their energy- and water-saving systems, the structures will contain such environmentally friendly materials as recycled glass shards for flooring and recycled plastic bottles incorporated into carpeting. Constructed of green glass and green metal panels, the buildings will not only be environmentally green, but also green in color. “We like green,” Heany says.

“We been a green company for 20 years. We take abandoned brownfields and turn them into class A office, retail and luxury residential properties,” he points out. “We’re the ultimate recycler of product in the US. This is a natural next step for us. It’s what tenants are demanding, and it gives us a step up on the competition.”

Horizon II follows the opening phase of development for this reclaimed brownfield site, which is located at the intersection of Route 1 and Exit 28 of the Pennsylvania Turnpike. Phase one consists of a 128,000-sf office building, which was completed in 2004 and is fully leased, along with 350,000 sf of retail. Among the current office tenants are International SOS, Strayer University, Stanford Brown Institute, Full Spectrum and Newark InOne. Retail occupants are Wal-Mart, Lowe’s and several restaurants, bank branches and service amenities.

When O’Neill acquired the property in late 2002, it contained 27 vacant, condemned and dilapidated structures that were built by the state more than 30 years ago. To date, the company has completed more than 13 million sf of office and 700 multifamily units and now has more than two million sf of mixed-use and residential developments under way, overwhelmingly located in former surplus industrial and military sites.

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