For Tight Times, Office Space on Flexible Terms

By JANE L. LEVERE/ New York Times

Published: January 20, 2009

Despite New York Citys depressed economy, there is a flurry of activity in at least one niche of the real estate industry: business center companies, also often known as executive office suites.

PowerSpace and Services rents out this space at One Penn Plaza, with a reception area and conference room.

Since the middle of last year, such companies which rent out Manhattan office space on a short-term basis, offering services like a receptionist, mail delivery and telephone-call answering and screening have opened new facilities in the Dumbo neighborhood of Brooklyn, the Inwood neighborhood of Manhattan and in One and Five Penn Plaza, near Penn Station in Manhattan.

Industry officials and observers say Manhattan business centers which vary widely in terms of furnishings, services provided and rents charged are ideal for displaced or downsized businesses or start-up companies seeking space without long-term leases. But they also say the timing of the opening of New Yorks new Executive office Suites is unrelated to current economic conditions; most have been planned for a while.

Renting a Furnished office space in Manhattan is a very, very easy way to do business if you need only one or two offices, said Kathy Donohue, president of PowerSpace and Services, which runs the new business center in One Penn Plaza and is a subsidiary of Vornado Realty Trust. You dont have to lay out capital; the infrastructure is set up; you can lock the door and not worry.

Green Desk really simplified the process of opening an office, Mr. Humphrey said. Sizing is flexible if I grow, I can move into a larger space. And they handle office stuff, like receiving packages and making sure the Internet and phone work.

Some industry officials say they believe weakness in the rental market will create attractive expansion opportunities for business center operators.

The depressed economy appears to be affecting operators differently. For example, Joseph DeTrano, a vice president of Wurk, said it had signed up more tenants than we had planned for at this point.

But, over all, Mr. Bungert said, business is down for all operators, some a little and some a lot. We have seen a slight uptick in demand for space for five or more people, and much less demand from a single-office entrepreneur starting something new.