Alex. Brown considers two sites

March 24, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

If it elects to keep its headquarters downtown, Alex. Brown Inc. is likely to commit to one of two existing skyscrapers, says the company's chief executive.

"From an economic perspective, it's certainly more attractive to be in an existing building," said A. B. "Buzzy" Krongard.

The two office towers that appear to have emerged as front-runners are the 30-story Commerce Place, at 1 South St., and a 25-story high-rise at 120 E. Baltimore St., where the nation's oldest investment banking firm is a part-owner and already occupies one-third of the building.

While Mr. Krongard mentions the two buildings as top contenders, the Alex. Brown chief executive maintains he has not ruled out leaving downtown.

"Are we focusing on Commerce Place? Yes. Are we focusing on the former Bank of Baltimore Building? Yes," Mr. Krongard said. "But we're also focused on a lot of other options as well."

At stake are more than 800 white-collar jobs and up to a quarter-million square feet of office space, at a time when corporate stalwarts such as USF&G Corp. have decided to abandon the city's chief business district to reducecosts.

More important, Alex. Brown's decision is expected to serve as a barometer of not only the city's ability to retain its key business base, but also of long-term business confidence in downtown Baltimore. Alex. Brown has been based downtown since its founding in 1800.

Under its current negotiating framework, Alex. Brown is contemplating signing a 15-year lease for consolidated office space, Mr. Krongard and other sources said. That commitment would cost the firm roughly $70 million through 2010, based on market rates for Class A office space downtown and the discount Alex. Brown is expected to receive because of its large size.

Mr. Krongard's statements appear to rule out the possibility that Alex. Brown would commit to become the primary tenant in a newly constructed office building. Based on financing and development costs, a lease in a new building would cost the company roughly one-third more than in an existing building.

In recent months, various downtown landowners have proposed potential building sites for consolidation of Alex. Brown operations.

In all, the company would require roughly 250,000 square feet of office space to consolidate its eight downtown locations, which include Signet Tower, the Equitable Building, Redwood Tower and the company's 135 E. Baltimore St. headquarters.

All of the company's leases are set to expire in March 1997, but the company is expected to make a decision long before that date to give architects and contractors enough time to furnish Alex. Brown's offices.

Mr. Krongard added the company may leave some of its operations in less-expensive quarters, rather than including them a consolidation.

In addition to being the only new high-rises in the city's central business district with enough available space, both the 120 E. Baltimore St. and Commerce Place buildings offer a number of advantages for Alex. Brown.

Commerce Place, a $90 million tower completed in 1991 by a New York developer and one of Japan's largest construction companies, offers Alex. Brown brand-new Class A space and the large floors that the company is seeking for its trading floors.

It also has more than enough space. Nearly four years after its completion, the 450,000-square-foot tower is only 40 percent leased. The amount of available space is expected to translate into lower rents for Alex. Brown.

For 120 E. Baltimore St., its primary advantage is Alex. Brown's current presence and investment. The company spent hundreds thousands of dollars to wire its sophisticated computer and telecommunications systems when it moved there in 1989, a cost that Alex. Brown would likely incur again if it relocated.

"From a pure building standpoint, Commerce Place is probably a nicer building -- I don't know that for sure because I've never worked there," Mr. Krongard said. "But economically, it makes more sense to stay where we are."

The available space at 120 E. Baltimore St. has recently increased, thanks to a decision by First Fidelity Bancorp to vacate the three uppermost floors in the wake of its purchase of the Bank of Baltimore. The New Jersey-based lender occupies 53,100 square feet, or just under 20 percent of the building, developed by a partnership led by the Manekin Corp.

Alex. Brown occupies 80,000 square feet in the former Bank of Baltimore Building.

Richard M. Alter, Manekin's chief executive, said Alex. Brown is aware of First Fidelity's actions but has not yet made a decision on whether to lease the available space.

Mr. Krongard said the complexity of the company's decision is compounded by the shift in the city's central business district over the past 20 years, away from Charles Center toward the Inner Harbor.

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