My friend, Peter Fischbach, who owns an office leasing brokerage firm, Fischbach Commercial, has always been a fan of offices suites. These are a group of small offices, generally arranged around a central lobby. There is a break room with coffee etc. along with a room of general office services like copy machines and Internet service. Tenants rent individual offices.
I call them the “Halfway Houses” of office leasing because tenants are generally either transitioning from a home office to a more formal commercial space or settling in after a corporate career to “consult.”
According to Fischbach office suites have been fine investments over the last 10 years.
“They stayed flat or slightly improved in terms of demand during the severe downturn of the recession,” he said, “and were among the first commercial real estate genres to come back. Demand is very strong now, as it is across the commercial office spectrum, but with office suites, I’d characterize the demand as very strong.”
There are two reasons why office suites are popular. They may be enduring or could change next year. Only time will tell.
One is the recession that put a lot of experienced executives on the street. In any crowd of executives there is always a segment what spends a lot of time dreaming about owning their own business. The recession offered a great opportunity. Instead of collecting unemployment and hoping, these brave souls took out on their own and provided a customer base for office suite landlords.
This was true of not only corporate executives, but also lawyers. Many of them had no choice as many large law firms simply dissolved. They opened smaller offices or changed careers.
The second major strength is coming from the opposite direction. We all know that the Internet has made home-based businesses a realty. Many were getting to the point that inventory was filling up the living room, or a more formal setting for meetings was needed or the spouse ordered the other to “get out of the house.”
As a side note, I think it’s interesting that there are few “open” office suites, where people just grab a desk in the middle of a large room. The successful ones that I have seen have been very traditional with an emphasis on privacy and solitary work space.