Office Space News
Executive Office Suites Industry Gains Momentum
Published July 2nd, 2009 by Jennifer LeClaire
Executive office suites are gaining momentum. So says Jack McCabe.
Jack McCabe is head of McCabe Research & Consulting, a nationally recognized leader in real estate research, analysis and consulting in Deerfield Beach, Fla. His client list reads like a who’s who in real estate, including Marcus & Millichap, CB Richard Ellis and Wells Fargo. I’m reminded of the phrase, “When E.F. Hutton speaks, people listen.”
What is spurring the momentum in the executive office suites industry, especially in big cities like Miami, Los Angeles and Seattle?
“Some companies are downsizing. They have trimmed payroll down to just the top two or three people and others,” McCabe says. “Other people, because they can’t find jobs, are starting their own businesses and have a need for office space or a meeting room, and somebody to answer the phone for them so they look like a larger business.”
In the broader commercial real estate market, McCabe notes, smaller offices with less expensive lease options are outperforming larger offices. Meanwhile, larger offices are seeing rising vacancy rates. Landlords are renegotiating leases with companies to try to keep them in place, but serviced offices are winning some business based on the flexible approach to low-cost, turnkey leasing.
“In every marketplace, whether it’s up or down – there are always opportunities,” McCabe says. “It’s usually the savvy, intelligent business people who do their homework instead of looking for short-term, quick-gain profits that benefit in these times.”
In these times, the executive office suites industry is clearly poised to leverage the opportunity at hand – and some are doing just that. Regus is probably the most visible example. Whether the serviced office players that are posting expansion growth in this economy continue to thrive when the markets recover remains to be seen.
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Maggie Correta July 2nd, 2009 at 1:02 pm
Nice confirmation. It does seem there are some conflicting views on whether or not the executive office suites industry is growing. I suppose it varies from market to market, but overall it does appear that McCabe is right. He’s certainly knowledgeable of the industry. I think even some commercial real estate experts don’t quite understand the momentum building behind serviced offices space in the United States.
Rob Zeus July 2nd, 2009 at 2:24 pm
This guy Jack McCabe is all over the place. I mean, he gets interviewed in lots of major media outlets and he’s a very credible source. If he’s seeing momentum in the executive office suites industry, that’s a good take so far as I am concerned. There are pockets where that’s not true, I’m sure, but the industry is gunning for traditional office space market share.
Bill Brookshire July 2nd, 2009 at 2:33 pm
Executive office suites are definitely gaining momentum. I think more people are beginning to realize what serviced office space really is — and what it is not. The industry still hasn’t taken off in a major way in the U.S., but this down cycle might prove to be a turning point for executive office space providers. We’ll have to wait and see.
Elizabeth Sanchez July 2nd, 2009 at 6:10 pm
What a brutal reality– some companies are trimming down to their top two or three people. That’s the reality of the market today, for sure, and it’s hitting office space hard. The good news for some of these companies that are downsizing is that they don’t have to give up quality to get into a serviced office. Many of the serviced office providers are in beautiful high-rise buildings.
Melanie Jones July 2nd, 2009 at 7:24 pm
McCabe is right. There are a lot of folks out there trying to make a quick buck in this market. There are even some in the executive office suites industry doing the same. I think the serviced office brands that are left standing strong at the end of the recession will be in a great position to grow from there.