Liberty Property Trust is under agreement to sell much of its holdings in the Great Valley Corporate Center, the pioneering Chester County business park that transformed Malvern and made the developer into a major regional office landlord.

The company is selling 26 Great Valley properties, accounting for more than a million square feet of office and light-industrial space, to Horsham-based Workspace Property Trust, Liberty announced Monday.

The properties are part of a $969 million deal covering 7.6 million square feet across 108 suburban properties in Pennsylvania, Arizona, Florida, and Minnesota, Liberty said.

The Great Valley sales represent a milestone in Liberty's shift from suburban offices to high-end industrial properties for the likes of Amazon.com, with a heavy sprinkling of city-center space, such as its work on Comcast Corp.'s towers in Philadelphia.

Distribution centers will make up 80 percent of Liberty's holdings after the sale to Workspace and completion of current projects, up from 40 percent at the end of 2008, spokeswoman Jeanne Leonard said in an email.

"The world changes, and companies change," said Robert Fahey, an executive vice president at commercial real estate services firm CBRE in Philadelphia. "They're not wedded to the past. They're looking toward the future."

Liberty's founder, Willard Rouse III (now deceased), began developing Great Valley in the early 1970s, anticipating the migration of many Center City jobs into the suburbs. It has since grown to roughly five million square feet of space held by multiple owners over 700 acres. Tenants include the Vanguard Group, Johnson & Johnson's Centocor unit, and Liberty itself.

While Malvern has remained strong relative to more far-flung suburban Philadelphia markets, Center City demand has been growing at a faster clip.

Office space in Malvern and nearby Exton rented at an average of $25.06 a square foot during the three months ended June 30, up just 5.5 percent from $23.76 during the same period in 2010, when commercial services firm JLL began compiling data on the Philadelphia region. Space in Center City, University City, and the Navy Yard, by comparison, increased 19.4 percent to $29.75 from $24.92 during that period.

The preference for Center City space reflects a national trend, said Todd J. Poole, a managing principal at land-use-economics firm 4ward Planning Inc. in Philadelphia.

Big companies "are pulling up stakes and moving back into center cities because that's where the talent is and wants to be," he said. "It doesn't surprise me that a large portfolio of suburban office space is going to be flipped."

The transaction, expected to close before the end of September, is the second major deal between Liberty and Workspace, which bought a 41-building Horsham office park from Liberty in December.

Workspace is to acquire the second set of properties, which were 88.9 percent leased as of June 30, in concert with investment firm Safanad Ltd. of New York, Liberty said. The deal will likely make Workspace, established barely a year ago by former Mack-Cali Realty Corp. chief executive Thomas Rizk, into suburban Philadelphia's largest office landlord, Fahey said.

The sale is to include all of Liberty's Great Valley holdings aside from its headquarters building and the one million feet it leases to Vanguard, Leonard said. An additional 280,000 square feet of offices are being retained for redevelopment, she said. Liberty's only remaining suburban Pennsylvania holdings will be in King of Prussia, Leonard said.

John Guinee, an analyst with Stifel Nicolaus & Co. in Baltimore, said Liberty's actions come as no surprise.

"They're very lukewarm on owning commodity suburban office space," he said. "Owning industrial is a much better business."

215-854-2615 @jacobadelman

State Breakdown

Liberty Property Trust plans to sell 108 properties in four states, including Pennsylvania. The breakdown:

Arizona 14

Florida 45

Minnesota 19

Pennsylvania 30

SOURCE: Liberty Property TrustEndText