Just over three years after moving in, General Electric is vacating its $200 million headquarters ahead of spinning off into three separate businesses, becoming the latest large U.S. company to leave its home base amid a struggling national office market.
While the multinational conglomerate’s headquarters is set to remain in Boston, GE told employees Tuesday it is working to find new, smaller office space in the city, a GE spokesperson confirmed to CoStar News. The firm is also looking to sell its 62-acre Crotonville learning campus in Ossining, New York, where it has hosted corporate meetings and training sessions since the 1950s. It is planning reductions involving some other corporate sites, though the spokesperson did not specify which locations.
The news comes as companies across the country shrink their office footprints to balance the demand for remote work during the pandemic. The move by a major corporation such as GE, ranked by Forbes as the 33rd largest U.S. firm by gross revenue, could influence other companies’ decisions about office leasing.
GE began developing its headquarters at 5 Necco St. in 2017, about a year after it announced it would relocate from its former headquarters in Connecticut. The development project marked a $200 million, 2.5-acre redevelopment of a former candy factory. GE occupied the space two years later in May 2019 when the project was complete.
Employees moved into the building in May 2019, less than a year before the pandemic led companies to send staff home to work remotely. While the company was originally planning to house 800 workers at the headquarters, GE has announced it would not move forward with the planned second phase of its headquarters, so the workforce would be limited to 250 employees. There are now fewer than 200 people based there, many of whom come in only on a part-time basis, the Boston Globe reported.
The move comes as GE is in the process of breaking up into three independent businesses. GE HealthCare is set to spin off in 2023, then GE’s energy-related businesses plans to do so the following year as GE Vernova. GE Aerospace, which will focus on aviation, remains as the third entity. The spinoff was announced in 2020 as profits were dwindling, but the company has since seen a rebound in its revenue.
Other major corporate players besides GE have made recent moves to reduce or their relocate their offices. Earlier this month, Facebook parent Meta terminated a deal it had to lease about 457,000 square feet across two buildings in Mountain View, California, as it adapts to an increasingly remote workforce and a worsening economic climate.
And in August, Caterpillar, the world’s largest maker of construction and industrial equipment, put 116,000 square feet of its office space in Illinois up for sublease after announcing a headquarters move to Texas. A few months prior, defense contracting giant Boeing said it would vacate its Chicago headquarters to move to Arlington, Virginia, though it has not yet announced whether its office footprint will decrease from this move.
GE signed a 12-year lease for the Necco Street property in 2019. It was not shared whether the company would sublease the space or negotiate an exit with the property owner, Alexandria Real Estate Equities.
GE reimbursed the state of Massachusetts for its $87 million investments in the property, the GE spokesperson said. The company did not accept any of the $25 million tax breaks offered by the city of Boston, mainly because it chose not to construct the second phase of its planned headquarters, and instead it sold the property for $98 million.