GE delays plan to open new Fort Point building
General Electric Co. has pushed back the expected opening of its new building overlooking Fort Point Channel by two years after deciding to break the headquarters project into two phases.
GE vice president Ann Klee said in a memo Tuesday to Boston employees that executives expect the 12-story building, dubbed South Point, to open in mid-2021, compared with an earlier goal of 2019. Two older brick buildings, together dubbed North Point, will be renovated first, with the aim of opening them in the first half of 2019.
GE has already started work on the two old buildings, originally part of a Necco candy manufacturing complex. But construction on the new building was supposed to happen concurrently with much of the Necco renovations.
Now, GE will finish the Necco buildings and move employees into them before starting construction of the new building. GE expects it will take 24 months to complete the new structure.
“As with any construction project of this scope and complexity, we have been periodically reviewing the schedule and budget,” Klee wrote in the memo. “Based on that review, we have decided that it makes more sense and is more cost-effective to construct the campus in two phases.”
The announcement comes less than two weeks after John Flannery’s promotion to the chief executive’s job at GE. He took over from Jeff Immelt, who will remain chairman until the end of the year. Flannery has said he is reviewing all of GE’s operations, which would include the headquarters project.
The entire campus will be dubbed “Innovation Point” and consist of nearly 400,000 square feet of interior space spread among the three buildings. The futuristic 12-story building, designed by Gensler, will feature a giant solar sail and represent a striking departure from Fort Point’s old brick warehouses and the newer glass towers in the Seaport.
The industrial giant relocated its headquarters to Boston’s Fort Point neighborhood roughly one year ago, to temporary offices on nearby Farnsworth Street, while it worked on lining up its permits for its new complex at the northern edge of Procter & Gamble’s Gillette campus.
Landing GE’s headquarters was considered a big win for Mayor Martin J. Walsh and Governor Charlie Baker at the time.
The administrations worked closely together to recruit GE. Immelt said he was drawn to the city in part because of its innovation culture.
As part of the effort to attract GE from its former hometown of Fairfield, Conn., city officials promised $25 million in property tax relief over a 20-year period. The agreement with the city requires GE to have 800 people working in the new headquarters by 2024, and GE officials remain confident they can still hit that number.
More than 250 people work at the Farnsworth Street offices today.
State officials, meanwhile, pledged at least $125 million for GE’s new campus. Nearly all of the state money consists of grants to be used for acquiring and renovating the two old Necco buildings.
For that reason, MassDevelopment owns the two brick buildings, and GE will be the agency’s tenant.
An infrastructure program that state officials are tapping doesn’t allow the funds to be spent on a privately owned building.
But those state funds also aren’t contingent on meeting hiring goals.
In December, P&G completed a deal to transfer 2.4 acres along the Fort Point Channel for the headquarters complex. P&G pocketed $83 million from the deal. MassDevelopment bought the portion with the two brick buildings for $57.4 million, while GE spent $25.6 million for the remaining piece.
GE subsequently grew the size of the total campus area to 2.7 acres after it bought an additional sliver of land from P&G for $1.5 million, to meet a state open space requirement for waterfront land.
GE had previously estimated that the project will cost $200 million to build, a figure that didn’t include the price tag for the land but did include the state-funded renovations to the two old Necco buildings.
The property tax break that the Walsh administration offered GE is one of the largest in the city’s history, similar in size to one approved in 2010 for Liberty Mutual’s headquarters expansion.
The size of GE’s annual tax break will climb steadily over the first seven years before reaching $1.5 million. GE doesn’t need to hit any employment requirement during that transition period, giving the company considerable wiggle room for construction delays.
The tax break just applies to the new building, and
city officials have said GE would still pay the city nearly $50 million in taxes for that building alone over two decades.