General Electric is bidding farewell to its Fort Point headquarters only about three years after moving in, quietly closing a chapter in Boston business history that began with big hopes.
The company notified employees Tuesday that it plans to vacate the 100,000 square feet it occupies in two renovated brick buildings at 5 Necco St. early next year and will seek smaller office space elsewhere in Boston. While the company initially envisioned an 800-person campus along Fort Point Channel, fewer than 200 people are based there now and many only come in on a part-time basis.
It’s a big shift from the heady days in 2016, when GE relocated to Boston from Connecticut to much fanfare after a hard-fought competition over what was then considered one of the biggest prizes in corporate America. Governor Charlie Baker’s administration worked closely with then-mayor Martin J. Walsh’s to pull it off, and the two politicians touted it as a major win for the region.
But GE’s grand vision here never materialized. Chief Executive Jeff Immelt departed and his successors pared back the company’s ambitions, scrapping plans for a 12-story tower along Fort Point Channel and selling the site in 2019 to Alexandria Real Estate Equities and National Development, which is now building a facility there for drugmaker Eli Lilly.
Then came the COVID-19 pandemic, and two-plus years of widespread remote work. Now GE is one of many companies looking to scale back their office space, said John Barros, who was Walsh’s economic development chief and a key player in the effort to lure GE here.
“A lot of office users are looking at their . . . total workplace strategy and making decisions about how much real estate they need,” said Barros, who today is managing principal at real estate brokerage Cushman & Wakefield.
Along those lines, GE also said it will put its longtime corporate campus known as Crotonville, in Ossining, N.Y., up for sale. These real estate moves are part of GE’s broader efforts to downsize its corporate office footprint as it prepares to split itself up. In 2023, GE HealthCare will spin out as a separate company. The following year, GE’s various energy-related businesses will spin out together as GE Vernova. The remaining GE business will be known as GE Aerospace, focusing on aviation.
“Winding down our physical office space in Boston and other corporate sites is the next step as part of our plan to create three independent businesses,” a GE spokesman said.
GE never accepted any of the $25 million in tax breaks that had been offered by the City of Boston. And the company paid back $87 million in state funds used to renovate its headquarters property after the site was sold for more than $250 million; the state and GE also each received $11 million in profits from the deal. GE did, however, stick with its original pledge to make $50 million in charitable commitments in Massachusetts for community health, science and math education, and workforce training.
GE has shrunk considerably since coming here, divesting a number of business lines — including biotech, lighting, and transportation — under current CEO Larry Culp and his predecessor, John Flannery, in the hopes of improving cash flow. Culp’s turnaround efforts were gaining traction but the sharp slowdown in air travel in 2020 hurt the company’s crown jewel, its aviation business. Finally, about a year ago, Culp made the decision to break up GE.
The public officials who helped bring GE here said the city is still better off for the experience. Brian Golden, former director of the Boston Planning & Development Agency, said the recruitment efforts helped get Boston noticed by other possible investors around the country, and the world. And Barros noted GE’s numerous charitable contributions.
Jay Ash, Baker’s economic development secretary at the time of the move, said the latest changes at GE highlight the unsettled nature of the local economy as Boston and Massachusetts emerge from the pandemic.
“This is further indication that the economy we knew before the pandemic is not going to be the economy we know after the pandemic,” said Ash, who now leads the Massachusetts Competitive Partnership, a group of high-powered CEOs.
GE is now looking at locations in Boston for a smaller office, and is discussing its next steps with its landlord; GE signed a 12-year lease in 2019 for the Necco Street buildings, which it could sublease or turn back to the landlord after negotiations.
But for the company itself, selling Crotonville might actually represent a more seismic shift. The 62-acre campus in New York’s Hudson Valley has hosted corporate meetings and training sessions for GE since the 1950s, features more than 320,000 square feet of conference space and 248 guest rooms, and even inspired a memorable episode of the TV comedy “30 Rock” (at a time when NBC was still owned by GE).
Linda Boff, GE’s chief marketing officer, sent a letter to employees on Tuesday explaining the decision to sell Crotonville. The reasons, she said, are twofold: GE’s strong belief in the importance of learning on factory floors, “closest to where the work is done,” and the fact that a corporate campus of that size is no longer needed as GE is split into three independent companies.
“Crotonville will always be an important and cherished part of GE’s leadership legacy, and while this unique place will move on to new ownership, I know its spirit and purpose will remain,” Boff wrote. “The word ‘Crotonville’ has grown to mean much more than just the campus. Over the years, ‘going to Crotonville’ has become synonymous with any activity — on or off campus — where you are learning, growing, improving.”
Much as Crotonville came to symbolize GE’s success with leadership training, its sale symbolizes the end of that era, said Peter Cohan, associate professor of management practice at Babson College.
“GE was thought of as an incubator of talent, where people with a high degree of potential would go from running one business to another,” Cohan said.
Bill Aulet, managing director for Martin Trust Center for MIT Entrepreneurship, had hoped that GE’s arrival in Boston would bring a new wave of corporate leaders that could mentor local startups, and guide them to growth. The closures of the Boston headquarters and Crotonville, he said, show how those hopes largely won’t come to fruition, even if the moves weren’t necessarily surprising given GE’s breakup plans.
“It’s the promise of GE coming to Boston going up in flames,” Aulet said. “They invested in people who could scale companies. Those people are not easy to find.”