State officials Wednesday approved $700,000 in tax breaks for Akamai Technologies Inc. to subsidize the tech firm’s planned expansion in Kendall Square.
The state money will help defray the cost of new 19-story office building that Akamai plans to lease at 145 Broadway in Kendall. The company, which provides services that help manage traffic over the Internet, must add 700 jobs in Massachusetts over the next five years in exchange for the tax credits.
Akamai employs nearly 1,700 people in Massachusetts and more than 6,000 company-wide. In its application for the tax credits, Akamai said it was considering relocating some operations elsewhere if it couldn’t find a suitable location in Massachusetts.
The $700,000 award amounts to $1,000 per job, the most allowed under the program Akamai is using. The company said it expects those positions will pay an average of $100,000 a year.
The total subsidy is relatively modest compared to other recent tax-credit deals. Last year, for instance, the state awarded $3.25 million to Amazon for a new facility in Fall River, with 500 jobs, and $2.5 million to IBM for its Watson Health initiative, with 500 jobs, in Kendall Square.
Other programs, especially those that subsidize roads, sewers. and real estate development, are often far richer. GE, for instance, is receiving $120 million in state grants and other incentives to build a new headquarters and create 800 jobs in Fort Point, along with $20 million in aid from the City of Boston.
Although tax incentive packages often include money from the municipality as well, Akamai is not receiving any subsidy from Cambridge.
The company was founded in Cambridge 18 years ago and remained based there as it has grown to $2.2 billion a year in revenue. But its Cambridge workforce is scattered among six different buildings in Kendall Square. The company wanted to consolidate in a single site.
“We’d like to be connected,” said chief executive Tom Leighton. “We’re going to work on that.”
Akamai searched around the region for a site that would work before deciding to stay put in Kendall Square, where recruiting tech talent is easier and its existing workforce is familiar with the commute.
“We really like the area we’re in,” Leighton said.
It reached a deal with Boston Properties to occupy nearly all of a 19-story building that the real estate giant is planning on the corner of Broadway and Galilei Way. That building is going through permitting by Cambridge officials. Akamai said Boston Properties hopes to start construction in February and open it by the end of 2019. The company said it expects to spend about $136 million on real estate and equipment in the expansion.
Kendall is one of the hottest real estate markets on the East Coast. The average rent for top-tier office space in East Cambridge is $72 per square foot, according to Cushman & Wakefield, and often higher for new buildings. Terms of Akamai’s lease with Boston Properties were not available.
Although Akamai probably could have found cheaper real estate elsewhere, Paul McMorrow, a spokesman for the state’s Executive Office of Housing and Economic Development, said $700,000 in incentives to keep a well-paying, fast-growing company in the state seems well worth it.
“When you can get a company like that to grow here, that’s a deal” the state “will want to make,” he said.
The state’s Economic Assistance Coordinating Council approved subsidy packages for 12 other companies on Wednesday. Among them were Siemens Healthcare Diagnostics, Inc., which is getting $735,000 in life science incentives and $18.3 million in local tax increment financing from the Town of Walpole for a $300 million expansion there, and Pfizer, Inc., which is receiving a $2.9 million TIF for a new $200 million plant in Andover.