Scott Van Voorhis
There is a lot of speculation about the various businesses that may get a boost from the arrival of GE’s corporate headquarters in downtown Boston.
But it doesn’t take a rocket scientist – or for that matter GE’s R&D department – to realize that one particular commercial activity definitely stands to gain from an influx of highly compensated Fortune 500 execs, and that’s the business of selling luxury homes and condos.
The ink is still fresh on the deal bringing GE’s corporate headquarters to Boston, but luxury real estate brokers are already salivating at the prospect of hundreds of corporate masters of the universe hunting for new digs in the city’s toniest neighborhoods and suburbs.
And with GE’s top executives pulling down multimillion-dollar paychecks, it’s not hard to see the potential for some big bucks sales of downtown penthouses and suburban mansions in the months and years ahead.
“I fully expect to see some executives from GE in 2016,” noted Michael Cohen of Berkshire Hathaway HomeServices in Needham. “I fully expect the $1 million-plus price point in the western suburbs to become much more competitive as a result of this move.”
Fairfield and other wealthy towns in the southeastern corner of Connecticut are already bracing for the painful prospect of hundreds of homes owned by GE executives hitting the market.
As ground zero for GE’s headquarter relocation, the downtown Boston luxury condo market stands to reap some of the biggest gains from this mass migration of millionaire executives and their well-compensated underlings.
GE has committed to move 200 executive types from its soon-to-be former Fairfield, Connecticut corporate mothership. The company plans to either hire fresh or move another 600 tech types to Boston.
‘Hard To Overstate The Impact’
The company has taken up temporary quarters in the Seaport District as it explores its options, which include either leasing space or teaming up with a developer to roll out its own headquarter high-rise.
As the process unfolds over the next year or two, some GE execs are likely to rent first as they get the lay of the land, points out Neda Vander Stoep of Coldwell Banker’s Back Bay office.
“Given the timing, I foresee rental opportunities for GE employees at Millennium Tower as well as the many rental buildings in the Seaport,” she said.
But that hasn’t stopped brokers from reaching out to GE, with downtown condo sales and marketing czar Kevin Ahearn among them. Brokers are referred to the relocation companies GE works with, he noted.
As other companies – like up-and-coming biotech firm Vertex, with its splashy Fan Pier headquarters – have moved downtown, their executives have followed, snapping up high-priced condos.
Ahearn expects GE will have an even bigger impact.
“It’s hard to overstate the significance and impact,” said Ahearn, president and owner of Otis & Ahearn Real Estate. “It’s just unbelievable – the corporate headquarters of GE.”
But of course, GE isn’t just any old company – it’s got some of the most highly paid executives on the planet.
CEO Jeffrey Immelt, who owns a little mansion in New Canaan and who snapped up a $5 million condo in Manhattan a few years ago, leads the pay parade.
Immelt picked up a $5.4 million bonus in 2014 and had his base salary bumped up to $3.8 million, not to mention picking up hundreds of thousands of stock options. His pay package, all told, tops $18 million, according to Salary.com.
But that’s not all. Speaking of stock, Immelt has bought more than 1 million shares of GE stock since 2001, which, based on last Wednesday’s closing price, would be worth a whopping $28 million.
Vice Chairman John Rice pulls down nearly $15 million a year, while Keith Sherin, another vice chair, makes $11.7 million. GE’s chief financial officer gets $10 million a year and its top lawyer earns a nifty $9 million.
When these guys hit the downtown condo market, they will have some cash to flash.
Their timing is good, with the new, 60-story Four Seasons tower taking shape in the Back Bay and a new condo high-rise in the works overlooking the waterfront at Fan Pier.
Plus, unlike some corporate migrants from other parts of the country, GE execs are used to paying top dollar. Fairfield, after all, is in the posh southeastern corner of Connecticut near New York City – the median price is $525,000 and the asking price for homes in the town is more than $800,000.
Meanwhile, In The Suburbs …
Of course, while some GE execs will settle downtown, others will surely find their way to Boston’s wealthiest suburbs, where brokers will be waiting upon their arrival eagerly.
“We fully expect Wellesley and Weston to be chosen by a good number of these GE families,” notes Elaine Bannigan, broker owner of Pinnacle Residential in Wellesley. “We look forward to helping them become established in the area,” Bannigan wrote in an email, noting she used to work for GE herself years ago.
In fact, Cohen over at Berkshire Hathaway in Needham sees an even tighter and more competitive luxury market ahead as GE executives start to snap up homes in the suburbs.
He sees Brookline, Needham, Newton and Wellesley as natural draws for various GE bigwigs, with a potential for bidding wars for homes in the $1 million and up range.
All those towns combined have less than a thousand sales of homes and condos for over $1 million in 2015.
“It’s unlikely that everyone would buy in these towns, but even dropping 400 to 600 new buyers into that market would have a major impact,” Cohen wrote in an email.
If you want to see what the GE move might do to the real estate market in Boston and its close-in suburbs, then just take a look at what happened in the Littleton area along 495 after IBM built a 3,000 employee campus there, says Tom Skahen, founder and CEO of StreamLine Communities.
“Since then, commercial construction has accelerated with The Point (Sam Park) … and (there has been) a big upturn in housing values for Littleton, Westford and Acton, all driven by high tech employees,” Skahen wrote.
GE’s move will certainly bring a bounce to the Boston area’s luxury real estate market, though how much of a bounce, we will just have to wait and see. Stay tuned!
