General Electric is backing out of its glitzy Boston ambitions, selling the land it planned to hold a new 12-story headquarters for 800 employees and instead retreating into the two brick buildings on the same site that can hold 250 workers, the company says.
The industrial conglomerate and the state economic development authority, MassDevelopment, have agreed to put for sale the whole 2.7-acre GE-owned site located in Boston’s Fort Point neighborhood. Proceeds from the property sale will reimburse MassDevelopment for the $87 million it has spent renovating the two existing buildings for GE.
The scaling-back hasn’t changed GE’s interest in Boston—which it heralded in 2016 when it announced plans to leave Connecticut’s Gold Coast for the Bay State. The headquarters will still be in Boston, however slimmer, according to a written statement from Ann R. Klee, head of GE’s Boston development and operations.
“We are looking forward to moving into our permanent headquarters space in the refurbished Necco brick buildings later this year,” she says. “While changes in the company’s portfolio and operating model will lead to a smaller corporate headquarters, we are fully committed to Boston and proud to call it home.”
Behind the GE’s decision are big changes in corporate philosophy for the 127-year-old industrial giant.
The troubled company has spent the past few years whittling away at business units, divesting itself of oil and gas interests, financial services units, healthcare divisions, and power companies. GE is also moving traditionally corporate functions out to the business units.
In July, CFO Jamie Miller said the company was “decentralizing a lot of what is done at corporate today and both moving folks to the businesses as well as a number of headcount reductions. … We had historically run a lot of things centrally here at corporate as well. And that’s all getting pushed out to the businesses, things like global growth, things like ventures, things like IT and other shared services.”
GE (NYSE: [[ticker:GE]]) has said its slate of corporate changes are expected to save it $500 million by the end of 2020.
The deal announced today to sell the land—along with its transferrable permits for a 12-story office building—as well as the Necco buildings received unanimous approval from MassDevelopment. Any proceeds on the sale above $87 million will be split between GE and the state, according to the agreement.
For now, the state’s happy it’s keeping GE in town and getting paid back for what it put into the venture so far. (Not all East Coast economic development officials had the same luck on Thursday.)
“The Baker-Polito Administration is proud that General Electric chose to relocate the company’s world headquarters to Massachusetts and looks forward to GE’s ongoing contribution to the growing innovation economy,” Lizzy Guyton, spokeswoman for Massachusetts Gov. Charlie Baker, said in an emailed statement. “The administration together with MassDevelopment reached an agreement with GE for the company to fully reimburse the Commonwealth for the cost and expenses associated with the Necco Street project and the administration looks forward to working with GE as the company grows its world headquarters here in Boston.”
