GE GE Aerospace

By Thomas Gryta and Jon Kamp 

BOSTON -- General Electric Co. is scaling back its planned Boston headquarters, including selling the property and dropping plans to add hundreds of jobs, because the shrinking conglomerate no longer needs the facilities.

The company reached an agreement with Massachusetts to return $87 million of incentives and jointly sell the waterfront site. GE plans to lease back some of the buildings to house its senior executives and about 250 employees, down from initial plans to add about 800 staff.

GE moved to Boston from Fairfield, Conn., in 2016 after considering 40 other locations in a high-profile decision. The $200 million project included renovating two existing brick buildings and constructing a new glass office tower. In 2017, the company put on hold plans for the office tower as its financial condition deteriorated.

"While changes in the company's portfolio and operating model will lead to a smaller corporate headquarters, we are fully committed to Boston," said Ann Klee, vice president of Boston development and operations at the company. The Boston Globe earlier reported on the news.

In the last 18 months, GE has cut its dividend to a penny a quarter and sold businesses to raise cash to help reduce its more than $100 million in debt. New Chief Executive Larry Culp aims to shrink GE's headquarters operations and push those costs and responsibilities down to the individual business units. The strategy is to give unit leaders more accountability for spending and profits, while reducing the number of employees in overhead functions.

Massachusetts owns the brick buildings, which were once the home of candy maker Necco and under renovation, and GE owns the property where the new tower was planned. The plans and permits for the new building will be transferred with a sale, the company said. GE and the government will split any proceeds from the sale that exceed the amount spent by the parties on the project.

GE is also walking away from a property-tax incentive package from the city of Boston valued at as much as $25 million, said John Barros, Boston's economic-development chief. That money, which was based on the company hitting employment and site-development benchmarks, hasn't been paid out.

The industrial conglomerate's Boston home sits across a channel from the downtown financial district and on the edge of the trendy Seaport neighborhood, where development has been booming for years. The GE site was long derelict while a prior owner sat on the property, but Mr. Barros believes it is prime real estate in a congested city undergoing a sustained development boom.

"Given Boston's real estate market, it will get developed," he said. "I really feel like GE moving to Boston opened up a key part of our city for development. We will get jobs on that site."

GE broke ground on the building site in 2017 with much fanfare in a ceremony that included former CEO Jeff Immelt, Gov. Charlie Baker and Mayor Marty Walsh. The plan was to house 800 employees, including 600 "digital industrial product managers, designers and developers," the company said in its announcement.

When Mr. Immelt retired in 2017, GE delayed the construction of the glass tower as the company started to restructure its business and scale back its digital operations.

The conglomerate moved its headquarters to Boston three years ago, uprooting itself from more than 40 years in the woods of Connecticut, in order to be in a more urban setting where it could recruit the workers needed to develop its technology operations.

At the time, the company said the move would have no material financial impact because of the package of incentives and the sale of its Connecticut site along with 30 Rockefeller Plaza in New York. The 126-year-old company has previously been based in upstate New York, as well as Midtown Manhattan. It moved to Connecticut in 1974.

Write to Thomas Gryta at thomas.gryta@wsj.com and Jon Kamp at jon.kamp@wsj.com

(END) Dow Jones Newswires

February 14, 2019 18:42 ET (23:42 GMT)

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