Summit Big Winner in Merck Relocation

David Dietze, JD, CFA, CFP

Summit is a big winner in the relocation of Merck’s global headquarters to the town.  It starts with finances.  That Merck property in town is one of its biggest real estate tax paying properties, so the news that a global leader has reaffirmed and increased its commitment to the location is good news for the town’s financial health.  We have seen in other localities in NJ the consequences of business moving out, and the pressure it puts on the taxpayers left behind.  

Other key financial beneficiaries would include the shopping/retail and the non profit/charitable sectors.  The high profile and prosperous employees of this global leader will undoubtedly do more shopping, more dining, and more business in Summit.

As to the nonprofit sector, Merck already has a long track record of giving back to the community.  Now, with its direct presence, Summit will be ground zero when it comes to defining the community.  Thus, expect our local hospitals, senior centers, youth programs, etc. to all be potential beneficiaries.

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Finally, Merck employs well paid and talented personnel.  Expect local real estate values to benefit as these people seek to reduce commuting time and gravitate to our neighborhoods.

From the standpoint of the Merck investor, I am not sure there’s much significance.  You did not see any pop (or fall) in the stock price upon the release of the news; indeed the stock closed lower yesterday than the day the news was released.  This is not a revenue enhancement; although the press release suggested money would be saved by consolidation, no numbers were presented.  It could have been worse for stockholders:  For example if Merck had decided to build a skyscraper in NYC.  It could have been better, for example had Merck decided to move its headquarters to a lower tax jurisdiction.  On balance, I believe it reflects a careful balancing between the costs of Summit and the value received due to its proximity to transportation and NYC and the presence of and convenience for well qualified  employees.  But, I don’t think it caught stockholders or the financial markets by surprise that Merck made an intelligent decision.

Residents should look at this move favorably.  They dodged a bullet, if Merck decided to abandon the site, with a possible increase in property taxes to compensate.  Rather, it validates residents’ decision to locate to and or remain in Summit.  It should be a positive for the downtown and local property prices. 

Sure, this influx of jobs will continue to put a focus on the Summit schools.  It surely will be cited by many as proof that Summit already has fine city services, including schools.  I agree with that.  But, of course, as citizens and community leaders we must continue to work hard to continue to merit the confidence in Summit that Merck’s decision reflects. 

David Dietze is Founder, President and Chief Investment Strategist of Point View Wealth Management, Inc., based in Summit, NJ and a member of Summit’s School Board.


 The Guest Column is our readers' opportunity to write about a given issue or topic in an in-depth and educational manner.

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