Office Space News
Will CB Richard Ellis buy Regus?
Published October 17th, 2008 by Mike Sullivan
Will the serviced office industry ever see a time when the largest providers of flexible office space merge with commercial real estate titans? Hopefully, the answer is yes. To get to this point, the serviced office industry must grow significantly and become more flexible and provide far more services than they do today. That’s an exciting prospect to me.
While we don’t believe CB Richard Ellis will buy Regus, nor are there any rumors that support this notion, it illustrates a point. The serviced office industry is a 1% niche in the global commercial real estate market. It can grow through getting more small business clients and it can grow through getting more enterprise size clients. If you look at the biggest bang for your buck, that growth will be faster and more profitable through getting more large corporate clients. Simply put, they are more stable financially, require fewer sales and marketing resources and are willing to pay more money per office.
And how can executive suite providers get more corporate clients? Well, one way is through partnerships with the big real estate firms (like Cushman & Wakefield, CBRE or Colliers International). Regus is already doing this with their global network of locations. I have heard that ABCN is doing it with its network of independents. And lots of the web brokers are working hard on finding these corporate clients as well. But perhaps the best way is for a global serviced office provider to become part of one of the large commercial real estate firms.
It could happen. I just doubt it will happen anytime soon, and not with Mark Dixon at the helm of Regus. He’s got too much to do before it gets to that. And of course, there are no other sizeable serviced office operators in the world. So we’ll just have to wait. It should be interesting.
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The truly flexible office space company | abetteroffice October 23rd, 2008 at 9:26 am
[...] recently wrote about a , briefly merger concept between a traditional commercial real estate company and a serviced office, mentioning how a company like this could help corporations more effectively and efficiently manage [...]
Marcus Hester November 10th, 2008 at 9:43 am
Definitely food for thought here. I think you are right that the industry has a long way to go before that happens. But the foundation is being laid now for what could shakeup the office market as we know it in the years ahead. It’s vital that this foundation is laid wisely, and deep enough to support the weight that it intends to bear.
The partnership and strategic alliance tack has worked in many industries and I see no reason why it can’t work in this one. Whether or not that will lead to actual mergers and acquisitions remains to be seen. But anything is possible in todays’ market.
Bill Brookshire November 12th, 2008 at 9:50 am
I expect we’ll see some merger and acquisition madness as the economy turns around. This is the perfect time for serviced offices to demonstrate their strengths in a down economy… And those strengths — low cost, convenience, flexibility, etc. — don’t go away in a thriving economy. This is the time for this industry to gain a greater foothold as companies downsize and new entrepreneurs look for opportunities in the midst of crisis. If serviced office players do the right things now, this industry could see skyrocketing growth in the next decade — and that would certainly open the door to brokerages acquiring some of these assets, or perhaps starting their own brands.
The truly flexible office space company | aBetterOffice November 12th, 2008 at 12:38 pm
[...] recently wrote about a merger concept between a traditional commercial real estate company and a serviced office, mentioning how a company like this could help corporations more effectively and efficiently manage [...]