Office Space News
Avanta Launches Property Division to Lower Rent
Published February 3rd, 2010 by Jennifer LeClaire
Are you sitting down? If you’ve leased your office space two or three years ago, you could be paying about 40 percent more than current market rates. So says Richard Douglas, head of Avanta Property Management, a new division of serviced office provider Avanta. But Douglas isn’t just highlight a problem – he’s offering a solution: Avanta Property Management.
Avanta launched the new division to help office users who are locked into long-term property leases – and that have unused space available for subletting – to recover some of its monthly costs. It’s called the shadow market. Companies that have downsized typically have extra office space and can relieve the burden on the bottom line by finding a suitable co-tenant for a sublease.
“There’s a vacuum in the market that’s been created by a mismatch between supply and what potential occupiers actually need. So, we will address the gap between a conventional lease and serviced office space to the benefit of both current and new office space occupiers,” Douglas says.
“There’s a healthy demand from businesses seeking accommodation for one to five years and for between 20 and 100 people, but these businesses are demanding flexible lease terms as they won’t risk making any long-term commitments during the current economic downturn.”
Office Suites Matchmaking
These kinds of deals are not normally a good fit with traditional agents, who can generally only offer secondary property options, Douglas explains, but with so much underutilized Class A property on the market, there are opportunities for both current occupants and businesses looking for flexible leases.
As Douglas sees it, Avanta Property Management’s proposition is a perfect fit for existing corporate occupants that have already made an investment in the infrastructure of a building. The new service, he says, is also attractive to larger companies that often consider themselves too independent to move into a business center, as these often include services they believe they don’t need.
“We are set up to take the hassle out of all negotiations, both for existing occupiers and landlords, as well as potential new occupiers, and will deliver fully-operational space within six weeks on a build-to-suit basis,” Douglas says.
“In addition, with our user-friendly short-form of lease we can also fast track the legal processes. This is a major benefit to new occupiers who can’t afford to wait months to conclude a traditional lease negotiation which could fall apart at any stage.”
Will Avanta’s Big Idea Work?
Avanta is going out on a limb with its reputation, but the overall risk for the company is low. It doesn’t take tremendous resources to launch a property management division. The expertise and the marketing, however, are vital to success. Avanta does well with Douglas on its side. Douglas is the former managing director of Managed Office Solutions, which he founded in 1999 and subsequently sold to Regus in 2006. He knows the industry inside and out and can bridge the gap between traditional office users and executive suite users.
Getting the word out might be the tougher part of this equation, and I have no idea how Avanta plans to do that. Word-of-mouth alone won’t be enough to drive broad success of this new division. Although Avanta is doing some media relations around the property management division, that effort will demand consistency if it’s going to pay dividends.
In any case, so far it looks good for Avanta’s latest venture. The division has only been operational for two weeks is already negotiating on a number of large occupancy deals. We’ll have to keep an eye on this one. If it works for Avanta, other players in the serviced office space could rush to the opportunity.
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Bill Brookshire February 3rd, 2010 at 11:37 am
Great story, Jennifer. You really drilled down into this one. Avanta is an innovative company, so it doesn’t surprise me that they recognized an opportunity in this ’shadow market.’ I’m guessing the situation is the same in many countries around the world. This is good for the overall commercial real estate industry and it’s good for competition in the serviced office industry as well.
Elizabeth Sanchez February 3rd, 2010 at 12:00 pm
That’s a good point about getting the word out. I am sure there is a demand for what Avanta is offering, but the problem is they are competing, at some level, with traditional brokers and property management firms. There is major competition right now, so that’s the big issue I see. There’s an education curve here as well. This is not a standard idea they’ve come up with for subleasing office space.