Intenational office space giant Regus, known for offering flexible long- and short-term leasing solutions for individuals and businesses, is expanding its presence in Manhattan, with two new office space options next month, plus at least one next year.
The company will be opening a 40,000-square-foot space at the William Kaufman Organization’s 77 Water Street and a 13,000-square-foot space at J.A.B. Madison Associates’ 477 Madison Avenue in November, Colleen Susini, director for the New York area at Regus, said. The two openings are part of a larger initiative to expand the company’s presence in New York City, which will also include an office at 411 Lafayette Street at the beginning of 2012. Details of the Lafayette Street space were not yet available.
At a time when office leasing is volatile, falling to 6.7 million square feet in the third quarter from 10.6 million square feet in the second quarter, according recent data from Cassidy Turley, it may seem odd for the company to be expanding, but Susini said Regus is seeing a spike in interest since the recession.
[Temporary office space] “offers people flexibility,” she said. “They can sign a short-term agreement while they figure out where they’re going or while they wait for a permanent space.”
In this market, she said, flexibility is key. As Robert Goodman, executive managing director at commercial firm Colliers International, told The Real Deal last month, larger deals will be put off until tenants get a better sense of whether the market is headed.
“What’s happened now is that the marketplace [is beginning] to have a lot of uncertainty, and no one wants to look in the rearview mirror and be punished for having made a bad long-term decision, ” he said. “I think there are some big deals to be had, but they will be done at a point when people are convinced that they are securing value pricing, and it is not necessarily where we are right now.”
For temporary office providers, the road through the recession has not been without bumps. One office provider said the recession hasn’t particularly done his business any favors.
“It’s a common misconception that office suites do better [when the economy is weak] than when the office market is strong,” said Daniel Entwistle, president of NYC Office Suites, which has temporary office locations at 1350 Sixth Avenue, 708 Third Avenue and 420 Lexington Avenue and has been seeing occupancy hover at the three suites around 90 percent since the recession. “While I think there has been an uptick in the economy, it’s still very challenging because there’s still a lot of available space, especially traditional office spaces that are being subleased.”
Entwistle also noted that providers were pricing aggressively.
“[The pricing] is nowhere near what it was,” he said. “We’ve had to slash it by around 30 to 40 percent. We’re doing well with ‘swing space’ [which is short-term space to bridge a gap] for special projects or in between leases. We’re currently providing space for 60 Amazon.com employees because they’re growing very quickly and they don’t have any contiguous office space.”
Amazon was not immediately available for comment.
For those who have been laid off or are seeking new positions, renting a space in a flexible office environment can also offer networking opportunities, said Cheni Yerushalmi, co-founder of Sunshine Suites, which has locations at 419 Lafayette Street and 12 Desbrosses Street and recently partnered with the Bloomberg administration to bring an office incubator to the Bronx.
“People are not working in Starbucks so much,” he said, “because they’re seeing a bigger return on their investment here. It’s more than just a desk.”
In terms of pricing, Yerushalmi said Sunshine has kept its rates relatively consistent throughout the downturn.
He added: “$375 [per month] has been our sweet spot for a dedicated solution [or one-person space], $475 for co-working.”
As for Regis moving into a space just a few buildings down from Sunshine’s location on Lafayette Street, Yerushalmi said he isn’t too concerned.
“I really feel that our audience is very different,” he said.