Could Everett become Boeing’s next jetliner headquarters?

By Julie Johnsson and Noah Buhayar / Bloomberg

Boeing is weighing whether to vacate the Renton headquarters of the commercial-airplane division as it cuts costs and stockpiles cash. The result could be a move of the headquarters staff to Everett or Boeing Field in Seattle.

A sale of the Longacres headquarters of Boeing Commercial Airplanes in Renton would include an adjacent building once used to train airline pilots. Boeing converted the land in the 1990s from a horse-racing track to an office park. The property has 855,000 square feet of office space.

Leaders of Boeing Commercial Airplanes would move to vacant offices at the Everett campus north of Paine Field or to Boeing’s Plant 2 area, across the street from Boeing Field in Seattle, people familiar with the matter said.

In Everett, the company has two office buildings adjacent to the enormous Paine Field factory, where twin-aisle jets are assembled.

In Seattle, the Plant 2 site on the Duwamish River was the location of a storied World War II-era factory. Today the paved land is used for auto parking and parking for undelivered 737 Max airplanes. The Plant 2 site, on East Marginal Way South, is next to the still-standing building that long housed Boeing’s corporate headquarters before it was moved from Seattle to Chicago in 2001.

Whatever site is chosen for a new Commercial Airplanes headquarters, many employees would continue to work from home — as they’ve done during the coronavirus pandemic — while sometimes sharing communal work stations on a temporary basis, said the people, who asked not to be named because the plans are confidential.

The study is part of a broad review of all of Boeing’s real estate holdings, even its Chicago headquarters, Chief Financial Officer Greg Smith said. Boeing is already slimming down the century-old manufacturing base around Seattle. In Everett, the company is preparing to close a production line for the 787 Dreamliner to contend with an aircraft market gutted by the pandemic.

“We’re evaluating all real estate across the globe,” Smith said in an interview. “But no decisions have been made other than what we’ve announced.”

Smith is spearheading a five-pronged assessment of Boeing infrastructure, overhead, operations, investments and suppliers.

Boeing has already decided to shift its product development organization back to Everett, clearing out a 338,577-square-foot office building that it leased in Mukilteo. That move was reported earlier by the Puget Sound Business Journal.

Globally, Boeing is reviewing a portfolio that spans 2.4 million square feet of office space and 124 million square feet of factories and warehouses, one of the people said.

The effort encompasses every property the U.S. manufacturing giant owns or leases around the globe, with teams updating Smith and Chief Executive Officer Dave Calhoun on a weekly basis. They’re digging into how well the properties are used today and accounting for longer-term trends such as reduced demand for jets and the shift to home offices that was spurred by the pandemic.

The overarching question is “how do we set up the company to be leaner and more competitive on the other side” of the crisis, Smith said. He also serves as Boeing’s executive vice president of operations.

There are risks to consolidating operations, from distracting workers to damaging the company’s culture, and the rewards aren’t always clear cut. With the 787 program, the supply chain accounts for about 70% of costs and the magnitude of the benefit from shifting to a single final assembly line in North Charleston, South Carolina, is unclear, JPMorgan Chase & Co. analyst Seth Seifman said in a report this week.

In real estate, the same trends driving Boeing’s review are weighing on the pricing of the space it’s thinking about vacating.

The rise of remote working has the potential to decrease office demand, said Danny Ismail, an analyst at real estate research firm Green Street. That makes it difficult to tell how much Boeing could get for Longacres and could complicate a sale.

In general, offices have fetched around $175 a square foot in Renton, Ismail said. But there’s a wide variation and not that many transactions for comparison.

Some buildings in the Seattle suburbs have fetched premium prices during the pandemic, though. In September, Facebook Inc. agreed to buy outdoor retailer REI’s never-used corporate headquarters in Bellevue for $368 million.

“The signs of life that are there are in the suburban markets,” said Chris Kagi, an office broker for Savills in Seattle.