Alex. Brown Inc. completed the largest downtown office lease of the decade yesterday, and at the same time cemented its headquarters presence in the city well into the next century.
The venerable investment banking firm's commitment to the 30-story Commerce Place skyscraper ends a lengthy search for a headquarters location, as well as a fear the company would exit its home city of 195 years and pull 920 professional jobs from Baltimore.
"The economics of our lease are such that we'll be able to upgrade our space, bring operations together and not increase our rental costs," said A. B. "Buzzy" Krongard, Alex. Brown's chairman and chief executive officer. "And we're doing it in the hope of capturing certain efficiencies."
Under its lease terms, Alex. Brown beginning in early 1997 will occupy 240,000 square feet in the 1 South St. building, which will be renamed after the firm. The cost of Alex. Brown's 12 floors through the year 2012 is valued at roughly $88 million.
Alex. Brown's lease comes after largely symbolic but nonetheless devastating corporate defections and continued white-collar job losses downtown.
Earlier this week, the Baltimore Gas and Electric Co. announced it will shift its long-time downtown headquarters to the Annapolis
area as part of a planned merger with the Potomac Electric Power Co. in early 1997. BGE has pledged to maintain a significant presence in Baltimore, however.
"They could have easily moved out of the city," said Robert C. Embry Jr., president of the Abell Foundation, a nonprofit group aimed at benefiting Baltimore. "I think it's a great tribute to Alex. Brown and Buzzy Krongard that they decided as they did."
Mayor Kurt L. Schmoke said through a spokesman that Alex. Brown's commitment to downtown represents "a great help to the city's business retention and attraction efforts."
In addition to economics, Alex. Brown selected the $90 million Commerce Place because of its large floors and sophisticated ++ mechanical and fiber optic systems, said Walter D. Pinkard Jr., president of Colliers Pinkard, the real estate firm that represented the company.
The larger floor size will allow the company to consolidate its trading floors.
"Only a couple of years ago, we were countering rumors that we wouldn't start or finish the building," said Kevin F. McAndrews, president of McAndrews Realty Advisors and a former managing partner of Harlan Co. Inc., the New York firm that together with a Japanese partner completed the Commerce Place in late 1992.
"And in a four-year period, in a down market, we've leased a significant portion of the building to arguably Baltimore's most prestigious office tenant. The building's owners could not feel better."
The company, with more than $8 billion in assets under management, will raise Commerce Place's occupancy level to 90 percent. The company plans to relocate from a number of its present downtown locations, including the Signet Tower and the 25-story 120 E. Baltimore St. building, but has not yet decided the fate of its present domed headquarters at 135 E. Baltimore St.
In May, Alex. Brown signed a letter of intent to relocate to Commerce Place, committing to a minimum of 145,000 square (( feet. Mr. Krongard said the 65 percent increase occurred because Alex. Brown's needs expanded. The added space also provides the company with flexibility, should it decide to consolidate other disparate operations into Commerce Place.