"We were hoping, in some respects, to open in June," Sebastian Royle, Techspace's director of sales, tells GlobeSt.com. "But it's better for the companies who want to move in to do it in September." Royle says Techspace has yet to sign a lease with an Austin tenant, but is talking with several interested parties.

Techspace, based in New York, leases office space for as short as three months and offers office services for fees. It has pulled back from an incubator model as venture money dried up and start-ups followed. In May, it added 16 tenants to five spaces in the US and Canada. In Austin, it is building out space at 301 San Jacinto, a block east of Congress Avenue and the former home of the Voodoo Lounge, a music club.

Its key markets such as New York and San Francisco have felt the impact of the dot-com bust and slowing economy. In Austin, Techspace enters the market as sublease space is rising and new company activity is declining.

The Downtown sublease market is the third biggest in the city with 234,448 sf open. Sublease rents are being discounted by about 25% from a year ago. Venture capital investments have continued to drop the first half of 2001. Seedstage.com, a start-up formed to help start-ups get off the ground, will close its doors this summer, citing the market.

If that situation gives Techspace pause, Royle isn't saying. He enumerates competitive rates, flexible space and lease lengths and a menu of services as the weapons in his company's arsenal.

Royle describes potential Austin tenants as "companies probably within conventional leases that are looking to get out of them. Companies that are in similar space to us and want to take advantage of our price competitiveness and the environment."

There also are out-of-town companies who want to set up Austin operations and don't want to do it whole-hog right away. Then there are several networking groups that might arrange joint ventures with Techspace, Royle says. "They would take space with us and we'd get promotion from them.