10 Myths About Office Business Centers, Part 1

Published June 11th, 2009 by Jennifer LeClaire

In my daily hunt for relevant news and features related to the executive office suites industry, I stumbled upon The Private Office, a provider of shared offices in Westchester, New York.

I’ve written about The Private Office before in terms of its free consulting offer and went back to the site to see if there was anything new going on. What I found was an interesting article called “10 Myths About Office Business Centers.”

The Private Office contends that Office Business Centers (OBC) are rapidly adapting to new realities in our working environment, but their image is rooted in the industry’s inception several decades ago. In order to help executives properly evaluate the OBC option, the company compiled a list of 10 commonly held myths about the industry.

I am going to spend the next couple of days running through these myths and commenting on them from my perspective as one who covers the industry daily. Feel free to chime in with what you see – or what you don’t see – in the OBC world. We might agree. We might disagree. But we can get a healthy conversation going that may shed more light on the state of the industry.

Without further ado, here are the first five “myths.”

1. OBCs Offer an Alternative to Renting Commercial Space.
According to The Private Office, this fallacy represents one of the key misconceptions the industry struggles against every single day: “Today’s OBC provides administrative services, electronic infrastructure and a working environment ready to go from day one. In doing so, it frees clients from the time and responsibilities required to install telecommunications systems and copiers, select and train administrative staff, and monitor maintenance items such as cleaning and painting.”

I agree with that statement to a point…Today’s OBC definitely offers all of those value-added services that make it ever so easy for small businesses to enter a market without a major infrastructure expense. But I don’t agree with the blanket statement that the notion of OBCs serving as an alternative to renting commercial space is a myth. OBCs are an alternative – an attractive one – because of the lease terms and the furnishings that are part and parcel with this type of space.

2. Office Location is Unimportant in Today’s Global Marketplace.
The Private Office cites the above statement as a myth. As industries become more competitive, the company argues, differentiation among rival organizations often hinges on intangibles. “An office in an impressive building with beautiful grounds, in a prestigious location, speaks volumes about a company’s success and ability to satisfy its clients,” the company says. “Prospects can be overwhelmed by plush interiors, an accommodating staff and a professional atmosphere. Proximity to other successful organizations affects the impression of your own.”

I totally agree. It’s a myth that location doesn’t matter. In fact, that flies in the face of the real estate mantra “location, location, location.” I haven’t heard anyone say that office location is unimportant, so I am not sure this is a prevalent myth in the industry we know today. But if you do happen to hear this statement, don’t believe it. It’s not true. Office location does matter. It might not be the clincher, especially in the digital world, but first impressions mean a lot. I used to work in a studio apartment in Miami Beach. That had a certain cache as a young struggling artist. That wouldn’t do with the Fortune 500 clients I work with today.

3. OBCs are Too Expensive.
Some executives are impressed by the services OBCs offer and think it would be cheaper to start from scratch with empty commercial space, according to The Private Office. “This viewpoint ignores the economies-of-scale employed by OBCs to provide services infeasible for singular use such as videoconferencing. OBCs also offer meeting spaces for large gatherings, avoiding the need to find and rent space for a yearly event. Considering all the costs necessary to transform traditional commercial space from an ‘empty box’ into a working office environment, the OBC option can actually be less expensive.”

Here’s how I see it: Some OBCs are more expensive than others. A serviced office in Los Angeles is probably going to cost more than a serviced office in Des Moines. Some may indeed be too expensive for an entrepreneur’s taste. But there are many different brands to choose from with varying levels of access to technology and services. Long-term, companies may indeed be better of renting a traditional office space if they are on a growth track. But for most small businesses, OBCs are a godsend, offering access to all the amenities they need but couldn’t afford to build out if they leased a traditional space.

4. OBCs are Primarily for Start-Up Companies.
According to The Private Office, the above-stated myth views OBCs as a stepping stone to a commercial office. “While some companies using OBCs benefit from administrative services, especially if they do not have enough work to hire a full-time employee, OBCs serve small, medium and large-sized firms in a wide variety of fields including law, finance and business-to-business,” the company says. “Larger, well established companies open satellite offices in new locations and utilize OBCs as their regional headquarters. Some clients are so happy in their OBCs, they stay in them for decades.”

I am in partial agreement with this statement. I don’t think we could classify the statement as an all-out myth, however, because that means it’s not at all true for anybody. The truth is, OBCs are a stepping stone to a commercial office for some companies. In fact, some office developers have even built projects that incorporate serviced office space and traditional commercial space in the same facility for that very reason. I do agree that OBCs work so well for some companies that it becomes a viable long-term solution.

5. Office Business Centers are Only Staffed from 9 a.m. to 5 p.m.
As The Private Office sees it, in today’s 24/7 world, this limitation would sound a death knell to our industry. “OBCs offer customized solutions for their clients including flexible hours for staff, telecommunications and other specialized needs,” the company says. “In fact, when a traditional employee in a commercial office is unavailable, OBCs offer full staff and administrative support to help a company meet deadlines in any time zone.”

I agree that this is not a true statement for the industry as a whole. While it may be true that some OBC have limited hours, most major players are flexible. What’s more, larger operators that have networks across various time zones can indeed accommodate administrative services well beyond the 9-to-5 business world’s schedules.

All in all, I think there are a lot of misconceptions around OBCs. I am not sure that I would label every one of them a myth, per se. In many cases, the issue is market education. In an industry that has so many “myths,” surrounding it, the market players need to do a much better job of telling the end users what the real story is. Where myths persist, public relations and marketing efforts have failed.

Come back tomorrow for Part 2 of this article.

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