Courtesy Gensler

General Electric will delay construction of a 295,000-square-foot office building in Boston for two years in a shift of real estate strategy for its $200 million global headquarters under new CEO John Flannery.

Work on renovation of two existing buildings at 5 and 6 Necco Way will continue with plans for occupancy in 2019, according to a memo sent to GE employees Tuesday. The distinctive 12-story office building would be completed in mid-2021, instead of 2019.

“As with any construction project of this scope and complexity, we have been periodically reviewing the schedule and budget,” Klee wrote in the memo according to The Boston Globe. “Based on that review, we have decided that it makes more sense and is more cost-effective to construct the campus in two phases.”

A ceremonial groundbreaking was held in May at the 2.7-acre site, which includes two vacant warehouses at 5 and 6 Necco, which were acquired by MassDevelopment in December 2016 for $57.4 million. GE paid $25.6 million to buy a parking lot at 244-284 A St., which is the planned site of the new 12-story building. Both properties were owned by Gillette parent Procter & Gamble.

GE opened a temporary 60,430-square-foot headquarters at 33-41 Farnsworth St. in Fort Point after the industrial conglomerate vacated its longtime Fairfield, Connecticut headquarters last summer. Approximately 250 employees are based in those offices.

Under terms of a state incentive agreement, GE agreed to pay $1 a year for 20 years to occupy the Necco Court buildings.

“GE has been in touch with the administration to reaffirm their commitment to the commonwealth and their announcement does not impact any commitments made by the state,” Lizzy Guyton, spokeswoman for Gov. Charlie Baker, said in a statement.

The first phase of the project also will include widening of the Boston Harborwalk and installation of a public dock on Fort Point Channel.

“For GE, opening a new headquarters is a ‘once-in-a-40-year’ decision. We are committed to Boston and look forward to moving to GE Innovation Point, which will be a hub for innovation and the industrial internet,” Ann Klee, vice president of GE’s Boston development and operations, said in a statement.

Flannery’s predecessor Jeff Immelt made GE’s move from suburban Connecticut to Boston’s Fort Point a centerpiece of his efforts to strengthen the company’s tech focus and bolster its employee recruitment. GE agreed to employ 800 people at the three buildings by 2024.

Flannery was CEO of GE Healthcare prior to Immelt’s retirement Aug. 1.

Designed by Gensler, the new office building’s designs include a large convenor space and landscaped roof terraces. The 95,400-square-foot warehouses are being converted into offices, public makerspace, space for GE’s Brilliant Labs career center and a ground-floor restaurant.

In a statement, Mayor Marty Walsh said the “short construction delay” shouldn’t be interpreted as a sign that GE is wavering from its commitment to Boston.

“We are looking forward to welcoming GE to Boston, and I know they are committed to establishing their headquarters and growing in our city,” Walsh said.

This article was updated after it was originally published to include a statement from Mayor Walsh.

GE Hits Pause On New Office Building

by Steve Adams time to read: 2 min
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