“We’re only just starting to see what the GE effect could be.” So says Frank Petz, Managing Director of JLL’s Capital Markets team, when considering the potential short and long term impacts of GE’s recent relocation to the region. “The effect is going to be multidimensional and far-reaching, impacting not only the Boston economy, but the city’s culture, and future growth trajectory,” Petz added. “While it may not all happen immediately, we will certainly see a concrete impact within the next two years, with even greater long-term implications for Boston’s position on the world stage.”
With a market cap in excess of $260 billion, GE alone is bigger than the next six largest companies in Massachusetts, so what this means for Boston and the surrounding areas cannot be understated. From enhancing the city’s brand, to other companies following suit, to bolstering the community through significant charitable endeavors, the impact of GE’s move to Boston can and will be felt in so many different ways.
“The psyche of Boston has been dramatically changed,” said Petz. “Our competitive position to capture innovation-oriented organizations has been enhanced dramatically. This is only just the beginning.”
GE, which ultimately plans to bring 800 workers to Massachusetts over the next several years, already has 200 workers here locally, more than 80 percent of whom are transplants from Connecticut. One of the most notable of those new Boston residents is CEO Jeff Immelt. He’s just one of the many high-profile GE executives who now or soon will call the Greater Boston area home.
“You just walk out the door and you’re in the middle of an ecosystem that, quite honestly, as a big company, it makes you afraid,” Immelt recently commented. “You’re where the ideas are.”
“It’s further validation for Boston,” said Chris Angelone, Managing Director of JLL’s Capital Markets team. “For investors, particularly foreign investors looking for blue chip data, getting a Fortune 50 headquarters like GE is just one big check in the Boston column.”
It’s also a stamp of approval for the Fort Port neighborhood. Over the last several years, Fort Point has become a bona fide destination for companies of all types and sizes, a shift primarily driven by an influx of new residential, retail and restaurants. But the addition of GE really puts this historic neighborhood on the map.
“As dense as the Seaport has become, the spot of their new headquarters was a dead location, there was really nothing there,” said Angelone, referring to the formerly vacant warehouses at 5 and 6 Necco Court that once served as a candy factory. “It was the back side of the edge of the Seaport. With GE’s addition, it really now links and fills in a big void between the Fort Point and Seaport neighborhoods. Geographically it’s not that big of a space, but they’re going in and reviving these great buildings that were essentially boarded up.”
When all is said and done, the cost of GE’s recently approved 390,000-square-foot headquarters will approach $200 million dollars. As significant as it is, that won’t be the company’s only major investment in the city.
Shortly after announcing their relocation plans, GE pledged to make $50 million worth of philanthropic contributions locally over the next five years. This will include donations for Boston public schools, the city’s community health centers, and manufacturing-oriented training opportunities. Considering that in 2015 the entire GE family contributed more than $200 million to community and educational programs, it’s probably safe to say their philanthropic impact on Boston will only increase significantly over time. In fact, Immelt was also just recently announced as the chair of the John F. Kennedy Library Foundation’s Centennial Dinner next May.
“We know education, we know health care, we know manufacturing,” Immelt said after announcing the planned $50 million in donations. “The idea is to open up so that in addition to our financial resources, we can have people that volunteer their time, we can have our own employees give hands-on capability and experience.”
But even with all that said, the impact doesn’t stop there. In fact, perhaps one of the most significant of the ripple effects of GE’s move will be the need for other companies to follow suit. GE has roughly 250 suppliers that provide them with a wide range of products and services. One of its largest suppliers, Genpact, a US-based commercial services company, generates 19% of its revenue from GE. The company, which has an office in Connecticut near GE’s former headquarters, currently does not have a location in Massachusetts. But for them and many other technology companies wanting or needing to be near GE, that could soon change.
“We’ve already had corporate clients from in and out of this market reach out saying we need to be near them,” said Ben Heller, Managing Director of JLL’s Downtown Boston Leasing team. “GE clearly sees Boston as a way to transition their company into the new era. People have been following GE’s lead for years and are certainly watching them around this decision,” he added.
“GE’s decision to locate its headquarters here has unquestionably confirmed the Boston area’s reputation as the place where innovative companies need to be,” said Susan Houston, Executive Director of MassEcon, which brings the public and private sectors together to promote Massachusetts as a place to do business. “While we can’t say GE’s decision has specifically attracted other companies– yet! – we’re seeing more and more corporate location advisors including Boston on their clients’ short lists. I’m comfortable calling this the “GE effect”, and we anticipate this playing out over the next few years with concrete new business growth in Massachusetts.”
So here we are left to benefit in so many ways from “the GE effect”. Boston wasn’t GE’s only option but it was clearly it’s best-suited one. The city was selected from a list of 40 potential locations, and ultimately evaluated based on factors including the business economy, talent, long-term costs, quality of life for employees, connections with the world and proximity to other important company assets.
“This more than ever solidifies Boston as one of the most important innovation hubs in the country,” said JLL Director of Americas Research Ben Breslau. “Massachusetts spends more on research and development than any other region in the world, is home to more than 50 colleges and universities, and has a diverse, technologically-fluent workforce. It’s no surprise GE chose Boston because the city aligns perfectly with the company’s growth aspirations.”