After their $68 billion acquisition of rival Wyeth Pharmaceuticals, Pfizer corporate real estate executives are engaged in a massive integration and portfolio optimization task.  Certainly many properties from both organizations are under strategic review, but this one undoubtedly involves the most external scrutiny.

Pfizer was not a party to the suit, and in fact is not even located strictly on the land at issue in the Kelo case.  But its prospective presence on 26 acres nearby was a critical and controversial element in the seminal real estate development battle. 

State and local politicians and economic development officials attracted Pfizer with a 10-year, 80% tax abatement on their parcel at 50 Pequot Ave, New London, CT.  Meanwhile, they used the company as the raison d’entre for an “urban village” revitalization plan in front of neighboring Fort Trumbull State Park, involving retail, multi-family residential, and hotel uses.  That plan called for existing properties to be forcibly taken by the city, leveled, then transferred to the site’s quasi-public developer, New London Development Corporation. 

As Pfizer completed construction on their $294 million facility in 2001, residents on the mixed-use site sued the city to prevent the completion of the project.  The city pursued the case to the High Court, and ultimately prevailed in a 5-4 decision interpreting the Fifth Amendment concept of “public use”, which was widely criticized. 

Subsequently, congress and 43 states have created various laws prohibiting or limiting the use of eminent domain for strictly economic development reasons and/or transfer to private developers.  New London’s “urban village” project has mostly failed to materialize, and the land between Shaw Cove and Greens Harbor where a neighborhood once stood is a splotchy mix of grass and dirt.  Now, Pfizer’s world-class office building next door will be vacant by 2011, just when the tax incentives run out.

In a front-page New York Times article, former residents such as Susette Kelo and Michael Cristofaro delivered what may be their final punches with “I told you so” spirited interviews.  Robert M. Pero, the incoming mayor, who fought for the project as a city councilman, also appears to be fuming that Pfizer did not consult or notify the city before announcing the move.

In the past few weeks, months of speculation are culminating as Pfizer has announced a number of closings – and affirmed the longevity – of various facilities throughout the world.  In other municipalities, local politicians are proactively approaching the company to discuss their plans and pitch the case to stay-put.  The US pharmaceutical industry is significantly clustered in a line between southern Connecticut and southeastern Pennsylvania.  Pfizer’s headquarters are in New York City, and Wyeth was based in Collegeville, Pennsylvania. 

Geographic clustering creates strong incentives and relatively straightforward opportunities to downsize the corporate real estate portfolio.  GlobeSt.com reported that Pfizer plans to reduce its global R&D footprint by 35%.  Functions and workgroups are being shuffled among sites throughout Pennsylvania, New Jersey, New York, and Connecticut.  Realignment will also affect properties in North Carolina, the United Kingdom, and elsewhere, but it seems these will not be as rapid.  And certainly none will be as dramatic as New London.

“Tom is an experienced and respected executive in the commercial real estate industry and we are extremely pleased to have him joining our company. With the recent completion of the company’s recapitalization, we are confident that Tom will accelerate the execution of Grubb & Ellis’ growth strategy and build long-term value for stockholders,” said C. Michael Kojaian, chairman of the board of Grubb & Ellis Company. “I also want to take this opportunity to thank Gary Hunt for the time and effort he devoted to the company as interim CEO.”

D’Arcy, 49, brings 25 years of successful leadership experience at various public and private real estate companies, and is currently the non-executive chairman of Inland Real Estate Corporation (NYSE: IRC), a $1.5-billion REIT where he has served as an independent director since 2005. D’Arcy also previously served as chairman and chief executive officer of Bradley Real Estate, Inc., a NYSE-listed real estate investment trust, from 1989 to 2000.

“I am excited for the opportunity to lead Grubb & Ellis Company, and to work with its team of highly dedicated professionals,” said D’Arcy. “Although the past year has brought significant challenges, the company has accomplished a great deal, including the recently completed recapitalization. This places Grubb & Ellis in a strong position to expand its leadership position in the commercial real estate industry, especially now while the market is in significant transition. I believe Grubb & Ellis has an enormous opportunity to leverage its talent, reach, proprietary research and local market expertise to create value for our shareowners, our clients and our employees.”

Prior to joining the company, besides serving on the Inland board, D’Arcy was a principal in Bayside Realty Partners, a private real estate company focused on acquiring, renovating and developing land and income-producing real estate. From 2001-2004, he was president and chief executive officer of Equity Investment Group, a private REIT. During his tenure at Bradley, D’Arcy significantly grew the company through restructuring, mergers and acquisitions, which led to its sale to Heritage Property Investment Trust in 2000, creating substantial value for its shareowners.

D’Arcy holds a bachelor’s degree from Bates College.

Anthony J. LoPinto of Equinox Partners conducted the company’s search and recruitment of D’Arcy.

At present, it appears that Integrust is essentially a one-man shop with several strategic alliances.  According to LaFavre’s CCIM Professional Profile, he has been involved in commercial real estate for 20 years, starting with The Trammel Crow Company in 1989.  He joined Colliers Turley Martin Tucker in October 2004, after ten years with United Properties, where he was Vice President of Corporate Real Estate Services. 

LaFavre is also a former the Co-Chair of CoreNet Global’s Midwest Chapter, and former President of the Society of Industrial and Office Realtors (SIOR) Mid-Continent Chapter.  He holds an MBA with Finance concentration from the University of Minnesota (1991), a BS in Marketing from Oral Roberts University, and several professional designations.

Integrust Advisory Group may be contacted via phone at 612-605-8467 or mail to 3116 Chelsea Ct, Burnsville, MN, 55337.

Facility and Corporate Real Estate executives today are focused on two major initiatives: Cuttings Costs and Greening Facilities. Many business leaders in corporations, government and higher education are realizing these undertakings are not mutually exclusive: environmental sustainability programs deliver major cost reductions.

According to the U.S. Green Building Council (USGBC), buildings in the United States are responsible for nearly 40 percent of CO2 emissions, 40 percent of energy consumption and 13 percent of the nation’s water consumption. Corporate Real Estate hides huge potential for CO2 reduction in combination with cost reduction for organizations that automate the measurement and management of energy consumption.

Available as part of the core suite, Planon Green Intelligence, the energy management component of Green Workplace Economics, is an easy-to-use solution that offers facility executives a practical way to jumpstart environmental sustainability programs by transforming aggregated asset-level to property level data into actionable information. Planon can then generate corrective work orders to quickly diagnose and correct over consuming facilities assets. Planon Talk, Planon’s widely deployed integration application, also ensures full connectivity with existing building technology and energy measurement facilities giving organizations a fully integrated solution.

With Green Intelligence, facility executives gain a global view of their real estate portfolio and assets and gain the ability to automatically issue corrective or reactive action within one seamless solution. With Green IT for Facilities, organizations can:

• Cut costs through reduction of energy consumption
• Extend the efficiency and lifespan of Facilities assets through Planned Maintenance
• Reduce carbon footprint
• Manage energy supply, costs
• Comply with organizational and federal environmental mandates
• Track LEED certification status across an entire real estate portfolio

“As a global company with a vast European customer base, our focus at Planon is to bring the best sustainability practices to our U.S. customers from around the world,” said Pierre Guelen, Founder and CEO, Planon Group. “Green Intelligence for Facilities helps organizations move deeper than simple real estate portfolio level reporting to provide a solution that gives executives the information they need to take decisive action on assets that will net them substantial cost savings and a clear, measurable return on investment.”

“Every organization is in a position to be more environmentally responsible and can likely save cost at the same time,” said Carol Baroudi Research Director, Green IT, Aberdeen Group. “These are global concerns. U.S. companies can take lessons from Europe, which is ahead in the adoption curve, and already realizing benefits from sustainability initiatives. Legislation is coming and it certainly behooves organizations to get a handle on what they have and understand how they can start their journey now. The sooner they start, the sooner they save.”

(Source: Company Press Release, via Business Wire)