MARCH 2008

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Meet a Member

Joseph M. Milano
Joseph M. Milano

Title & Organization:
Senior real estate associate
Merck & Co., Inc., Whitehouse Station, N.J.

Merck & Co., Inc. is a multinational corporation with an owned (70 percent) and leased (30 percent) property portfolio in excess of 30 million sq. ft. (2.8 million sq. m.) of office, research, laboratory and manufacturing space at more than 300 sites in 80 countries worldwide. Approximately 8 million sq. ft. (743,200 sq. m.) is general office space, 72 percent of which is located in the United States. Merck has approximately 65,000 employees globally.

What does your company manufacture?
Merck is a global research-driven pharmaceutical company.

To whom do you report?
Director of Global Real Estate within Global Business Services.

How many years have you worked in the profession?
33 years.

Where and what did you study?
I graduated from Baruch College, City University of New York, with a BBA and MBA degree in Management.

Describe the most important transaction or project for which you were responsible.
Merck facility in Elktron, VA
Vaccines Part of Merck Growth Story: Among the places Merck is investing are two vaccine manufacturing complexes in Carlow, Ireland ($297 million, 170 jobs), and Elkton, Va. ($193 million, 70 jobs). The Elkton expansion comes on top of a $57-million investment to expand cervical cancer vaccine production there in late 2006. First opened in 1941, the Elkton complex (above) currently employs approximately 700 people and is one of Merck's seven U.S. manufacturing sites.
Photo courtesy of Merck & Co.
It was not the largest, but the most complex and interesting was a build-to-suit lease deal for 130,000 rentable sq. ft. (12,077 sq. m.) of office space completed in New Jersey for a 15-year lease term, net basis.

What is the biggest professional challenge you face on a regular basis?
Having others within our own company understand the role of Global Real Estate and the value-added services we can provide.

How is the role of manager of real estate evolving?
It is much more technology driven and a faster paced atmosphere, with the mentality that "we want it now" as to our internal clients.

Which technology do you consider to be essential in your professional life?
Internet access, e-mail, cell phone and PC softphone technology – work remotely but have your office phone ring on your PC!

What is the value of IAMC membership to you?
It is extremely valuable to have direct access to other corporate real estate professionals who do what I do, and who speak the same language in terms of our profession. It is a very helpful group with a great administrative and teaching staff to support us.
Recruiting from Within
All or Nothing
n early January, Sussex, Wis.-based Quad/Graphics announced its intent to become the first commercial printer of its kind to have all its major manufacturing sites become LEED-certified.
   The firm has registered all 10 of its core U.S. printing plants for the designation by the U.S. Green Building Council, and hopes to lead off in mid-2008 with its headquarters complex in Sussex.
   "Quad/Graphics has always been committed to doing business in an environmentally friendly and sustainable way, and we already meet many of the criteria necessary for LEED certification," said President and CEO Joel Quadracci.
   The firm already recycles 98.5 percent of all waste leaving its plants, including paper, fluorescent lamps,
Quad/Graphics' facility in Sussex, Wis.
Quad/Graphics' headquarters and manufacturing complex in Sussex, Wis., uses native prairie plants to control runoff and reduce grounds maintenance. It's just one of many measures that will help the company in its goal to achieve LEED certification across its entire 10-plant core manufacturing portfolio in the U.S.
co-mingled containers, metal, plastic, wood and concrete. It subsidizes a bus route from Milwaukee to suburban plants in Sussex and Pewaukee. And it uses native prairie plants to reduce rainwater flow into storm sewers and minimize grounds maintenance. New steps will include more robust energy and water management systems.
   Around the same time in January, Denver-based ProLogis announced that it, too, would go all the way. Effective Jan. 1, 2008, the world's largest owner, manager and developer of distribution facilities requires all new development to be LEED-registered. ProLogis has 3.5 million sq. ft. (325,150 sq. m.) in the U.S. under design or construction for which it is pursuing LEED certification, and anticipates having as much as three times that on the books by the end of 2008. Its design standards already receive approximately half the credits needed for LEED certification.
   "By incorporating design elements for LEED certification for all our new distribution space in the U.S., we help to extend the lifetime of our buildings, ensure they perform to the highest standards of environmental construction, and provide our customers with distribution facility options that further their own sustainability agendas," said Walt Rakowich, president and COO of ProLogis.
   The company's green agenda extends beyond North America: In December ProLogis was named the U.K.'s "Best Overall Green Business of the Year" for 2007 by World Business, at an event hosted by British publisher Haymarket Group and European business school INSEAD.
   In October, another green award was doled out to Union Pacific Corp., when the railroad operator received the Energy Innovators Award from U.S. Secretary of Energy Samuel W. Bodman for the technological innovations in its downtown Omaha headquarters, the 19-story Union Pacific Center, which opened in 2004.
   "Conserving energy is critical to every American, and this goal was at the top of our list when developing this great new facility," said Jim Young, chairman and CEO of Union Pacific. "And, through great partners like the Omaha Public Power District, we were able to accomplish that goal."

Out Front
   Quad/Graphics won a 2007 Environmental Excellence Award from the EPA for its participation in the SmartWay Transport Partnership program, recognizing emissions reductions in freight transport. Its comprehensive environmental program even includes an e-mail "spokesgoat" named McGruff. But its benefits are no laughing matter.
   "LEED promotes efficiency," says Joe Muehlbach, director of facilities for the past six years of his 23-year stint with the company. Well before Quad/Graphics started looking at LEED, sustainability was encoded in its DNA. The company's recycling rate, for instance, comes after more than a decade of practice, though he says the company just started taking hard measurements over the past few years. Sometimes those measurements are hard indeed:
   "We've conducted what we call dumpster dives," he explains, which involve following company dumpsters to a landfill, opening them up, going through their contents and making calculations on what percentage could have been recycled.
   "Because we've been at this for so long, we set a goal of three- to five-percent improvement annually," he says of the company's sustainability initiatives, though he says results in water management have been higher than anticipated.
   "We believe the water crisis in this country could be one of the top environmental problems we face, so it should be everyone's responsibility to conserve if at all possible," says Muehlbach. That sense of leadership extends to policy: Muehlbach sat on Wisconsin Gov. Jim Doyle's global warming and climate change task force.
   Asked about territorial incentives for green initiatives, he says, "I know many regions are attempting to pass legislation. We would rather be out front and raise the bar than wait for legislation to force us to move."
Adam Bruns
wo members of IAMC's pharmaceutical cluster announced new deals in Europe over the holidays.
   In late December, Pfizer subsidiary Pfizer Magyarorszag Kft announced it would establish a new distribution center in Budapest, Hungary, that will also serve the nations of Bosnia and Herzegovina, Bulgaria, Belarus, Albania, Croatia, Moldova, Macedonia, Serbia, Romania, Slovenia, Slovakia and Ukraine. The project will create between 50 and 100 jobs and require an annual investment of just over $918,000 a year.
   In Paris, Bristol-Myers Squibb has sold Le Cristalia, the 236,814-sq.-ft. (22,000-sq.-m.) building it uses as its European headquarters, to Tishman Speyer in exchange for a new, long-term lease agreement for the entire building, constructed in 2002.
Exception Made
n October, Coca-Cola Enterprises opened its $16-million Customer Development Center at the Eastgate Metroplex in Tulsa, Okla. Employment is slated to grow from 105 to 300 within one year at the 60,000-sq.-ft. (5,574-sq.-m.) facility, which serves clients in 13 western states. According to the Oklahoma Dept. of Commerce, the company, which operates similar centers in Tampa, Fla., and Annapolis, Md., picked Tulsa from a list of 20 cities even though it falls outside of the company's service area, citing low costs, work-force availability, central location, and good working relationships between local and state officials.
Market Value
resh from its victory in the U.S. Supreme Court, where it had challenged the State of Georgia's methodology in assessing property market value, CSX and partners McCallum Sweeney, Greensville County and the Commonwealth of Virginia in late January announced the value enhancement of one property near I-95 and the North Carolina-Virginia state line. As the second of two certified parcels along CSX lines (the other is at Cecil Commerce Center in Jacksonville, Fla.), the 1,500-acre (607-hectare) megasite has been certified for automotive assembly or other advanced manufacturing operations.
   "Companies face intense pressure to bring product to the market," said Ed McCallum, senior principal, McCallum Sweeney Consulting, Inc. "Competition demands this. The first step in this process is to find a site that adds to, and does not detract from, project timing and execution. It is not enough to have good transportation access, an adequate labor force, or an excellent business climate; instead, you have to have all these things plus a site that can be developed in a timely manner."
Saved from the Axe
elped by a sales tax reduction offered by Louisiana Economic Development in addition to worker concessions, International Paper in November decided to invest $10 million in the conversion of its Louisiana Mill in Bastrop, in the northeastern corner of the state, from paper to pulp production. The move to keep open the mill – and retain more than 500 jobs – came after its closure was among considerations as part of the company's restructuring launched in 2005. The complex will see a work-force reduction of approximately 75 positions as well as wage reductions for all remaining employees over the next four years, a measure approved by union vote. The project is not the only pulp facility on the boards for the Memphis-based company. In December it announced it would invest $1.15 billion in a new pulp mill in Tres Lagoas, Brazil, which will supply a new paper factory it is building nearby.
Two Whoppers from Duke
uke Energy, whose prominence as a utility is centered in the twin poles of the Carolinas and Indiana, has now received clearance to develop a mammoth coal-burning power plant in each state.
   In late November,
Duke Energy site in Edwardsport, Ind.
The image above shows both the current layout of Duke Energy's Edwardsport, Ind., power plant and the proposed layout of its planned $2-billion clean-coal power plant, which received state regulatory approval in late November.
the Indiana Utility Regulatory Commission granted Duke permission to construct a $2-billion clean-coal power plant in Edwardsport, Ind., which would be the first commercial-scale coal gasification power plant built in the United States in the last 10 years.
   Pending state air permit approval, Duke could begin construction early this year and start producing power from the site by early 2012, while simultaneously retiring the coal and oil units at the site, built between 1944 and 1951.
   According to Duke, the new plant will be able to produce nearly four times as much power as the existing plant, but with 45 percent less carbon dioxide emissions per net-megawatt hour.
   The project's cost will be offset by more than $460 million in local, state and federal tax incentives. The bad news for some: The plant will result in an average electric rate increase of approximately 16 percent phased in from 2008 through 2012.
   But will Indiana's truly be the first? In North Carolina in January, Duke got permission to build the state's first coal-burning power plant in 25 years, a $2.4-billion, 800-megawatt facility to be constructed at the company's Cliffside site west of Charlotte. Part of that deal, too, involves the shutdown of older, dirtier coal-burning plants on a monitored schedule.

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