If Wall Street's bullet-like rise of the past 16 months has significantly boosted the bottom lines of Baltimore's investment houses, it has also cramped their offices.
Nowhere is the phenomenon more evident than at Legg Mason Inc., whose earnings mirror the Dow Jones' stratospheric climb. In its fiscal year ended March 31, for instance, Legg Mason's net income climbed 133 percent to $38 million.
At the same time, the company's employment ranks have swollen to more than 1,500 downtown, split between its headquarters in a green-tinted tower adorned with the Legg Mason name and a 20-story operations center that senior executives own at 7 E. Redwood St.
And with less than two years remaining on its lease in the Rouse Co.'s 28-story Legg Mason Tower, and little sign that the growth will ebb, the company with roots in Baltimore dating to 1899 has begun considering its options -- including relocating out of downtown.
"We'll do everything we can to stay downtown, but we can't have the company paying an excessive amount to stay," said Raymond A. "Chip" Mason, the company's chairman and chief executive officer. "We've had personnel growth in most of our departments across the board, in proportion to our business growth, and we need now to project that forward to determine what our needs will be."
At the heart of the matter is cost, and how that cost affects Legg Mason's ability to compete. Legg Mason's current agreement with Rouse costs the company roughly $2.6 million a year. On a per-square-foot basis, Legg Mason pays about 20 percent more than the depressed downtown office market can command.
"A lot of this comes down to a rental-rate factor," Mason said. "We can't and won't get caught paying an above-market rate."
The other primary issue is need: Legg Mason will require about 250,000 square feet of office space by 1998, more than either of its buildings could accommodate, Mason said. The company also believes it would gain operating efficiency by consolidating.
"There are significant economic and intangible benefits to being consolidated," said Walter D. Pinkard Jr., president of Colliers Pinkard, the Baltimore real estate firm Legg Mason has retained for advice on a future headquarters.
"The fact that people wouldn't have to walk back and forth from the two locations would help them," Pinkard added. "The operations component is an integral part of the financial services business, and they lose something when their senior executives can't directly interact with other senior people."
