Urban business locations are not just for startups. Some of America’s largest and oldest industrial powerhouses are moving their headquarters locations from bucolic suburban office parks to vibrant downtown neighborhoods, positioning themselves for growth in the digital age. Two such relocations—Weyerhaeuser and General Electric—were discussed at the ULI Spring Meeting in Seattle.
Weyerhaeuser president and chief executive officer Doyle Simons described how his 117-year-old firm decided to move into Seattle’s downtown Pioneer Square neighborhood from the 500-acre (200 ha) suburban Federal Way campus where it had been based since the 1970s. Following its 2016 merger with Plum Creek Timber Company, Weyerhaeuser became the world’s largest timber company, capitalized at $26 billion, with over 13 million acres (5.3 million ha) of timberland.
“After the merger, we became more focused and realized our 400,000-square-foot [37,000 sq m] building was much larger than we needed,” said Simons. “We wanted to attract and retain top talent, reduce overall costs, and have a unique space that feels like us. We looked at many options, some not in Seattle, but kept coming back to Pioneer Square.”
Pioneer Square is Seattle’s oldest neighborhood, with a real tie to the timber industry, Simons noted. A century ago, it was known as “skid row” where logs were literally skidded into nearby lumber mills. The area is a transportation hub with train, bus, and ferry connections. And Seattle is unmatched in the region for access to talent, he added.
Weyerhaeuser found a development partner in UrbanVisions, which was committed to sustainability and the revitalization of Pioneer Square. The development team identified a parking lot on Occidental Square for ground-up development. It moved quickly to build a modern eight-story, 160,000-square-foot (15,000 sq m) “tree fort” featuring extensive use of wood products, an eighth-floor deck with grills and sweeping views, modern spaces for work and recreation, and reduced employee parking. After selling Federal Way and leasing back part of the space, Weyerhaeuser moved into its sleek new headquarters last fall.
On the opposite coast, 125-year-old GE was making a similar decision to leave its 68-acre (28 ha) campus in Fairfield, Connecticut. “People think of GE as an old industrial conglomerate,” said Ann Klee, president of the GE Foundation. “But by 2020, we will manage 1 million terabytes of data on 1 trillion dollars’ worth of assets that we own or lease. We wanted to make our new corporate headquarters the epicenter of the new industrial internet.”
GE went through a rigorous site-selection process, Klee said. The only geographic requirement was to be near New York City and the company’s training center in Crotonville, New York. The selection team identified 40 cities against 87 criteria. These criteria fell into six “buckets,” Klee said, including the ability to attract and retain talent, the ability to create an “ecosystem of ideas and innovation,” quality of life, cultural fit, and access. Six-sigma analysis narrowed the 40 cities to 14, each of which was invited to make a pitch to the company, a process that further culled the selection to eight. A GE team visited each of the finalist cities, and in January 2016 announced the winning city: Boston.
“In retrospect, Boston was the obvious choice, but it was not obvious at first,” Klee pointed out. “Boston has a great business ecosystem with a diverse, technology-fluent workforce. Massachusetts spends more on research and development than any other region in the world. Quality-of-life features include the arts, sports, transportation, education, and health care. Also, there is an incredible partnership between the Democratic mayor and Republican governor, which helps greatly in issues such as permitting.”
GE acquired 2.5 waterfront acres (1 ha) from Gillette, where it will redevelop two old factories that once produced Necco wafers and build a new 12-story facility in an adjacent parking lot. In addition to modern office space, the new headquarters will include coworking space for startups, a Brilliant Career Lab where students can obtain hands-on experience with GE equipment, conference and event space, and a GE Experience Center for visitors. The new buildings will be ready for occupancy in 2018–2019. Concluded Klee, “Innovators, entrepreneurs, GE companies, startups, and our digital team all will come together in the Boston seaport to lay the future of the industrial internet.”
Any city in the country would be delighted to nab such prestigious corporate headquarters relocations, and many offer significant economic incentives to do so. But money is not always the focus of the decision, said Kate Joncas, Seattle deputy mayor. She noted that railroad and real estate speculation in the early 1800s led to a state constitutional ban on using public credit to finance private deals. “We do not have incentives and will never have them, yet we attract corporate relocations,” she said.
Seattle has a long economic history of boom and bust, Joncas noted. In 1897, Seattle became the gateway for the Alaska gold rush. The region prospered with airplane construction during both world wars, but Boeing lost about 100,000 employees in the 1970s. The tech boom of the 1990s was followed by the tech bust, which led to the Downtown Seattle Association’s strategic plan for creating a successful live/work/play/shop strategy for redevelopment.
Seattle’s downtown Business Improvement District (BID), now funded at $10 million annually, removes large amounts of garbage and graffiti and operates a program focused on keeping the downtown clean and safe. A 2007 up-zoning reversed a 1989 cap on building heights, leading to significant office development.
The city enacted three robust transportation initiatives, including one creating a $54 billion light-rail system; now only 30 percent of the city’s 265,000 employees—and only 10 percent of Weyerhaeuser workers—drive to work. Seattle is spending about $1 billion to remove an elevated highway along the waterfront, and even the cruise ship business is booming, bringing in nearly a million visitors per year.
“Incentives are helpful, but they are the frosting on the cake,” Joncas concluded. “You gotta have the cake—an authentic place where people want to live, work, play, and shop.”
Leslie A. Braunstein is principal of LHB Communications Inc., a public relations firm located in the Washington, D.C., metropolitan area.