Talk is heating up that State Street Corp. is planning to move some of its workforce to the Boston suburbs.

The Boston Business Journal reports the giant custodial bank is considering occupying as much as 800,000 square feet of office space outside the city, and may build a suburban campus. Among the possible locations is Westwood Station, a $1.5 billion development being constructed in Westwood that will include retail space, three hotels and as much as 1,000 housing units. (Officials with State Street did not respond to phone calls seeking comment and Colliers, Meredith & Grew, a Boston real estate firm hired by the bank to evaluate the feasibility of constructing a suburban campus, declined to comment.)

State Street's dalliance with the suburbs comes less than five months after Boston Mayor Thomas Menino convinced JPMorgan Chase & Co. to expand its fund services operations in the city rather than moving them out. The city remains keen to help its financial services firms, which have weathered the current downturn better than their counterparts on Wall Street.

"Financial services companies represent a $24 billion industry in Boston and I've made it a priority that we focus on ways to strengthen and grow this sector of our economy," Menino said at the time of the JPMorgan deal.

If media reports are accurate, the move would represent a huge change for State Street, which has been a fixture in Boston's financial district since 1792. According to the company's latest annual report, it leases about 3.4 million square feet in eastern Massachusetts, including its State Street Financial Center headquarters on Lincoln Street in Boston, and a building in suburban Quincy, where it also owns a property. Its non-cancelable agreement for State Street Financial Center expires in 2023. The expirations of the other leases could not immediately be determined in the SEC filings.

Company is Still Adding Staff

State Street, which employs about 27,000 people around the world, increased its headcount in the first quarter because of the growth in new business. Total operating expenses rose 44 percent, to $2.58 billion, partly as the result of increased incentive compensation. The company continues to hire as it had before, according to Justin Killroy of the Boston office of financial placement firm Ajilon Finance.

"They are still actively pursuing people in the market," Killroy says. "It seems like they are still looking to hire at all levels."

However, State Street faces many of the same pressures as Wall Street firms. In April, shares of the firm had their biggest plunge amid concerns it might have to bail out four mortgage-backed funds that are sitting on $1.49 billion in potential losses, according to Bloomberg News. One of the funds, SSga Yield Plus, was later liquidated, thereby locking in its losses for fund investors.

"They have got a lot of exposure to risky assets," says Stewart Plosser, an equity analyst with Standard & Poors. "I assume that they are looking to save costs like everyone else."