Corporations want more than just office space

Real Estate Weekly, June 23, 1993 by Lawrence E. Tannenbaum/findarticles.com

Despite ambitious predictions there is still a challenge ahead before equilibrium is achieved within the commercial real estate market: Vacant space is far in excess of demand and a shrinking tenant base prompted by corporate downsizing has translated into little or no effective absorption and depressed rental rates.

In the midst of this gloom; there is a growing tread towards shared, serviced office space. Today, the priority for corporate real estate managers is to find cost-effective pragmatic alternatives to a traditional office environment. As a result, small "flexible" or executive offices are providing utilitarian solutions and enjoying popularity.

Professional business centers have become corporate America's preferred satellite office expansion and relocation solution. The primary focus is on operational efficiency and revenue enhancing efforts. From telecommuting to remote satellite offices, corporations are determined to achieve greater cost efficiencies while employing individual productivity and customer service.

Underlying the success of the executive office suite concept is a growing consensus that an office need not be a cost center, with burdensome contingent liabilities and a plethora of daily time-consuming administrative issues. Rather, it can and should be an efficient environment in which to achieve maximum productivity.

"Major successful corporations see executive office suites as a desirable alternative to capital-intensive traditional office space for satellite or 'field' offices," said lane Booras, executive director of the Executive Suite Network, the industry trade association. "In fact, the majority of tenants in the more than 4,000 executive office centers throughout North America are field offices of major corporations."

Executive office suites are providing progressive solutions for tenants (both corporations and entrepreneurs) and for developers. For developers, the ability to provide flexible expansion opportunities and extensive executive amenities is a real competitive advantage.

However operating executive office suite facilities present their own challenges. Industry specific, "micro-management" techniques and the ability to successfully exploit the multitude of profit centers is vital.