Ryland to move to California

Columbia builder to shift base by July to key market

`Targeted for growth'

Relocation lengthens Maryland loss of company head offices

October 26, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Ryland Group Inc., one of the nation's largest homebuilders and headquartered in Columbia since its founding in 1967, will move to California by July.

In electing to relocate its headquarters to Los Angeles, Ryland becomes the latest of a string of high-profile, local companies that have been lost through acquisition or movement, including Alex. Brown Inc., USF&G Corp., MNC Financial Inc., Noxell Corp., PHH Corp., Waverly Corp., Commercial Credit Co. and Loyola Capital Corp. among others.

"Obviously it's a loss anytime a headquarters moves, because they add to the brand and prestige of the greater Baltimore region," said Ioanna Morfessis, president and chief executive officer of the Greater Baltimore Alliance, a nonprofit economic development organization.

"But there's a natural in-migration and out-migration of companies these days," Morfessis added. "Companies are very fluid these days, and there's a whole different set of dynamics that govern where companies put their headquarters today. Part of it's where the executives want to be, part of it's where their customers are. In this case, Ryland has a lot of business in Southern California."

As part of its move beginning in February, the 32-year-old Ryland will lay off about 100 workers and gradually reduce its local philanthropic activities with groups such as the Columbia Foundation and Howard County Community College Foundation over the next two to three years.

The company said it will continue to sell homes in the Baltimore area.

Ryland said the corporate headquarters shift is necessary to take advantage "of favorable business conditions for the housing industry and operate in key markets targeted for future growth."

"When you look at all the demographics, the move to California will give us an opportunity to grow," Ryland Chairman and Chief Executive R. Chad Dreier, who came to the company from Los Angeles six years ago, said yesterday.

"We're going to build more units in Southern California than in Maryland," he added. "I'm certainly aware of the history of the company, and we had to go further than average in weighing the move. But Ryland was founded to help build Columbia and Columbia is almost built out."

The plans to move its headquarters and about 15 employees to the Canejo Valley near Los Angeles aren't new, though.

Dreier, a California native who still owns a house in Santa Barbara, has been contemplating moving the company's headquarters for at least two years, sources said. Dreier acknowledges he has been thinking about moving "for a long time" but said the pending move has "very little" to do with his personal roots.

"It came up about two years ago, and there was a group of us that felt it was inappropriate," said Leonard Harlan, a former Ryland board member, citing the company's positive direction and strong leadership.

"We felt this was a Baltimore company, that being here was part of its heritage. It's a sad day for Baltimore and Howard County," said Harland, who resigned in June after 15 years.

Not everyone was lamenting the planned loss, though.

"The economy of this state and Howard County is so strong that the economic impact of this will be minimal," said Richard C. "Mike" Lewin, secretary of the state's Department of Business and Economic Development. "We hate to lose a headquarters, though. I'm sad about the decision, but it's clear this company had specific reasons for relocating."

Ryland has begun shifting resources. In July, the company moved its mortgage division to Woodland Hills, Calif., a suburb of Los Angeles, after a series of cuts at the corporate level.

"The number of corporate employees has dropped like a rock since Chad took over and with good reason," said Jim Joyce, the former president of Ryland's Baltimore division who now heads its operations in Phoenix.

"His drive in the company was to decentralize. We've built up the strength in the divisions," Joyce added. "The regional management is relatively loose, and I think the general move has been to say, `Hey, a lot stuff we used to do at corporate we'll do at the regions.' "

The company, which sublets most of its office headquarters at 11000 Broken Land Parkway, in Columbia, has two years remaining on its office space lease with the Rouse Co.

Ryland will continue to have a presence in the region, however, through sales of its homes. Edward W. Gold, president of the company's Baltimore division, said he has been given a directive "that I am to be appropriately aggressive."

Through the first half of this year, Ryland was the second-largest builder in the Baltimore metropolitan area with a 5.5 percent share of the market, according to The Meyers Group, a Washington firm that tracks new-home construction.

"It's a great disappointment," said Donald P. Hutchinson, president of the Greater Baltimore Committee, a business lobbying and leadership group where Dreier serves on the board and is treasurer. "Ryland is a corporation with historical roots in Maryland. But I don't think it's a reflection of Maryland, it's a reflection of where their business is."

Real estate editor Robert Nusgart contributed to this article.

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