10 Myths About Office Business Centers, Part II

Published June 12th, 2009 by Jennifer LeClaire

Yesterday, we looked at five myths that some in the industry believe are plaguing Office Business Centers (OBC). Those myths including statements like “Office location is unimportant in today’s market” and “OBCs are primarily for start-up companies.”

Today, we’re going to look at five more OBC myths proposed by The Private Office, a provider of shared services in Westchester, New York. With some of the items below, I can see how these myths got started – a lack of communicating the unique value proposition of the industry and its individual players.

With that said, let’s take a look at “myths” six through 10. Like yesterday, I am going to offer what The Private Office calls out as myths, then comment on my take as one who covers this industry day in and day out. Here’s the list:

6. The Luxury and Amenities in High-End OBCs are an Anachronism Today.
Clients, prospects and employees today, especially Gen Xers, expect certain perks, according to The Private Office. Sometimes winning that big account may be achieved through a workout in an on-site weight room, or a basketball game in the company gym, instead of a PowerPoint presentation,” the company says. “People do business with their friends, and winning a person over involves becoming one. A walk outside on well-kept grounds with fountains and gardens in the background can be very persuasive.”

Indeed, I agree that luxury amenities can have a major impact on sales efforts when you invite a potential client on-site to woo them. The same is true for recruiting efforts. I don’t think luxury amenities are out of place in an OBC. In fact, I don’t think enough OBCs have the kind of luxury amenities The Private Office described. The myth is not so much that luxury amenities are out of place, then, rather it’s that they don’t exist at all. Some folks don’t associated OBCs with luxury.

7. All OBCs are Alike.
To the point of number six, there are high-end and low-end OBCs. “Some were founded over 20 years ago and deliver a level of expertise suitable for high-paying clients. These OBCs generally stay on top of the latest technological innovations, with fiber-optic networks and electronic packages for their clients including website administration,” The Private Office contends. “Other OBCs focus on volume and deliver a less personalized approach.”

I agree that not all OBCs are alike. I just don’t think individual players in this space have done a good job communicating that message. In this case, if a myth exists, it’s because of a failure to communicate. It would seem to me that the burden is on the high-end OBCs to let the market know why they are better. But the low-end of the market could also communicate their “value.” Again, most folks I know aren’t equating OBCs with luxury.

8. The OBC Industry is Well-Known in the United States.
OBCs were considered a vital option for businesses in Europe well before the start of the OBC industry in the United States, where they are still relatively unknown, according to The Private Office. “Terminology creates a fundamental misunderstanding of our industry. In Britain, we are recognized as a service industry, and instead of executive suites, our colleagues use the term ’serviced office’,” the company says. “Instead of referring to ‘leases’ and ‘tenants,’ they talk about “clients” and “contracts.”

Bingo. This is a major issue. As I’ve mentioned a couple of times already, the OBC industry isn’t well known here. I am not sure who or where this “myth” that it’s well-known came from. It seems rather obvious that this is a nascent industry Stateside as compared to the United Kingdom. Regus is doing more than its fair share to get the word out through marketing and if no one else begins to amp up their messaging, Regus may dominate here.

9. OBCs Provide More than My Company Needs.
OBCs provide packages to save companies money including an electronic package, virtual office services, worldwide business access, concierge services, etc. But some OBCs also offer an “a la carte” menu with basic items such as word processing, document creation, graphics and more. OBCs provide customized, flexible service solutions for clients to fit their needs, according to The Private Office.

Of course, few people want to pay for what they are not getting. But if they can get a package at an attractive enough price, and there’s a remote chance they’ll use most of the features, many will opt for it anyway. I don’t think this is necessarily a myth, rather a potential objection. Again, this requires market education.

10. OBCs are Insulated from the Negative Effects of Economic Downturns.
While many OBCs benefit from increased occupancy rates during economic downturns, their clients may be overly cost-conscious about services designed in the long run to save them time and allow them to focus on their core competencies, according to The Private Office.

“As a result, the revenue per office declines,” the company says. “However, on the upside, companies may use OBCs more when they renovate their own location instead of moving to a new commercial space. OBCs specializing in renovation interim workspace service benefit from this additional source of revenue.”

I agree that this is a myth. OBCs are definitely not immune to recessions. As it turns out, it’s a mixed bag. Serviced offices may more awareness is the lean times, but folks may just as soon work from their home office as rent an executive office suite.

I said it before and I’ll say it again – effective marketing and public relations would help to address many of these myths, at least in local markets.

Do you have any myths of your own you’ve noticed? If so, we’d love to hear them.

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