Backed by subsidies, GE shops for real estate
As General Electric Co. looks for a new home for its corporate headquarters in Boston’s booming Seaport District, it will have a lot of spots to choose from, and a promise of up to $145 million in city and state incentives to help lower its real estate costs.
The industrial giant, which said Wednesday that it will move to Boston over the next three years, could receive one of the richest subsidies ever offered in Massachusetts: up to $25 million in property tax breaks from Boston and $120 million in grants and other aid from the state.
Exactly how much public money GE’s headquarters move gets will depend largely on what the building is and where it’s located. And that remains up in the air.
So far, the company has zeroed in only on the Seaport District but has not made a final decision on an exact location, said people who were involved in aspects of the search.
They said that GE is considering a range of sites, from an older six-story office building on Summer Street overlooking Fort Point Channel to a vacant parcel of public land near the MBTA’s World Trade Center Station on the Silver Line. It has explored several of the glassy towers under construction on Seaport Boulevard — where it would count Vertex Pharmaceuticals and the accounting giant PwC as neighbors — and a pair of underused buildings along Necco Street on the western edge of the Fort Point neighborhood.
The ultimate location will likely reflect the kind of statement that GE is trying to make about its new headquarters — and about its image.
After all, the conglomerate isn’t simply leaving a staid campus in suburban Fairfield County, Conn., for a bustling downtown Boston location. It’s also trying to reposition itself as an innovator in the modern-day knowledge economy. Of the approximately 800 employees headed for the new headquarters, three-quarters will be software developers and product designers and managers.
“If you want to use your real estate to set the tone for your brand, that sends a message,” said Steve Purpura, who heads the Boston office of Transwestern, a real estate firm. “They’re saying, ‘We’re not your parents’ GE. We’re a cool company. We’re a tech company.’ ”
It also wants a good deal, hence the incentives.
At a potential $145 million — which equates to more than $180,000 per job over 20 years — GE’s package would be bigger than the $72 million that Vertex Pharmaceuticals received to expand on Fan Pier, or the $46.5 million package that Liberty Mutual negotiated for its new headquarters building in the Back Bay. It would also top the state incentives that drew Bristol Myers Squibb to Devens and Shire Pharmaceuticals to Lexington.
Numbers aside, Governor Charlie Baker said it is a smart investment to make.
“This is a huge win for the city of Boston. A huge win for Massachusetts,” he said. “The indirect and direct spillover from this will be felt for years to come.”
Details of the package were sparse Wednesday, though Baker said the state money would come from existing programs that finance capital investment and infrastructure.
The city, meanwhile, will offer property tax breaks over 20 years.
GE will also get a basket of smaller benefits, ranging from $1 million in workforce training to transportation improvements to money to help the company’s workers relocate to Massachusetts.
“The economic benefit on the return outweighs the short-term tax incentive,” said Mayor Martin J. Walsh. “We’re going to continue to look at every opportunity we have to attract more business.”
The final size of the breaks will probably depend on what GE does — build new or rent existing space — and how much roadwork and other infrastructure improvements are needed to accommodate the property.
If city and state officials stick to underwriting related improvements, rather than giving GE a tax cut, then Boston should make out OK in the deal, said Noah Berger, president of the Massachusetts Budget and Policy Center.
“You don’t want to divert resources from our region’s long-term strengths,” he said. “Make investments that stay in our community.”
Massachusetts was competing with New York and Georgia, bigger states that were widely believed to be offering larger subsidies. Baker and Walsh needed to make a competitive offer, but not give away the store, said Larry DiCara, a longtime real estate attorney at Nixon Peabody.
The Massachusetts package, DiCara said, “gives a way to justify the decision to their board. It’s a way to justify a decision they may have wanted to make anyway.”
General Electric’s decision was Boston, and more specifically the Seaport. It is symbolic, said Mark Stewart, head of the Boston office of Savills Studley, a real estate brokerage. GE chose a place that has already undergone the very transition that the industrial giant turned technology company is aiming for.