Alex. Brown Inc. is nearly doubling its space in New York, and plans to expand its staff there by almost a third over time.
The company says not to read too much into it, though; the decision was based in large part on simple economics and logistics.
But the long-term commitment to New York -- the new lease extends to 2013 and will allow the staff to grow by a third -- shows that while financial companies can thrive outside of Manhattan, they can't afford to ignore it.
Money and space were the main reasons for Alex. Brown's pending move from 46,900 square feet in the Equitable Tower on Seventh Avenue to 84,400 square feet in 1290 Avenue of the Americas. The old space was expensive, the layout didn't fit the company's needs, and the 240 people there were crammed in as tight as a rush-hour subway car.
But the move will allow the Baltimore-based investment firm to maintain and expand several operations that effectively are headquartered in New York. The company's high-yield fixed income, its convertible securities and its business restructuring divisions are based in New York, largely because the people with the skills to run those activities are based there.
More than a quarter of the new space will be devoted to the retail brokerage; less than 20 percent each to corporate finance and research; 15 percent to equity and high-yield trading; and the rest split about evenly between fixed-income sales, and administration and back-office staff. The office is big enough to accommodate 350 people, which is the long-term hiring goal.
"We want to be able to hire great people, where they want to live," said Mayo A. Shattuck III, Alex. Brown's president and chief operating officer.
Other successful non-Wall Street investment firms also have recognized the need to be in New York. San Francisco-based Hambrecht & Quist, for instance, has research, investment banking and trading offices in New York. And Legg Mason Inc. of Baltimore has more than 50 people in retail and over-the-counter trading operations in Manhattan, according to Chairman Raymond A. Mason.
While Legg Mason's office was inherited -- it was the headquarters of Wood Walker Inc., an early affiliate of Legg Mason -- the company has been tempted to expand further there, Mr. Mason said. But the firm decided against hiring some research analysts who wouldn't move to Baltimore.
Some analysts, Mr. Mason said, "have this theory that if I'm not a Street analyst, it's over. . . . We've wondered many times whether we made the right decision" in not hiring some of them.
As for Alex. Brown, "they've been willing to run dual research departments, and not many firms have been willing to do that," Mr. Mason said, because of the hassles of long-distance oversight.
What it takes, according to Mr. Shattuck, is advanced communications technology, which has developed in no small part through some of Alex. Brown's high-technology clients. The company also has departments located in Boston and San Francisco, which is Mr. Shattuck's old locale.
In all, Alex. Brown's 2,200 employees are spread among 19 U.S. cities -- most of them retail brokerage offices -- as well as London and Geneva. Its newest office opened this summer in Tokyo.