TechSpace operates facilities here as well as in Boston and NewYork City where it provides a flexible full-service officeenvironment with technology support through a Tier 1 data center.Flexible lease terms allow room for upsizing or downsizing asnecessary, including everything from workstation furniture,advanced voice and data telecommunications, IT infrastructure,reception services and office supplies. The approach is designed toprovide tenants with the capability to grow their businesseswithout making a long-term commitment to occupancy or a capitalinvestment in the space.

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CEO Guy Pickrell of TechSpace tenant NationStaff says thelong-term commitments of traditional office space are reallydifficult for start-up companies like his, which has changed itsspace 10 times with TechSpace. "We would have been in some toughbinds if we didn't have the flexibility to change our size," saysPickrell, whose company offers executive search and consultingservices for the financial industry, with a focus on financialtechnology.

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The TechSpace story reflects conditions that prevail throughoutthe office leasing market. A recent report on the Orange Countyoffice market by CB Richard Ellis points out that although leasingactivity continues at roughly the same number of deals, the averageoffice deal was approximately 30% smaller in the latest quarter.Office space users are operating with fewer workers, causingtenants to downsize and/or relocate to smaller quarters, the CBREreport says.

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Another factor generating more businesses for firms likeTechSpace is that changing economic conditions have greatly reducedthe sales of office condominiums and small buildings to users whoat one time were snapping up buildings almost as fast as developerscould build them. Brokerage firms say that cash-conscious businessowners, rather than sink their capital into buying a building, areopting to lease space and hold onto the capital to operate theirbusinesses while they take a wait-and-see attitude toward theeconomy.

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Uncertainty about the economy is one of the reasons thatcompanies like TechSpace tenant Matthew David Events have turned toflexible space. Matthew David is an event production company thathosted corporate bashes for companies like JP Morgan and CNN beforefinancial industry woes reduced its clients' budgets and hence itsneed for office space. The company, which has been in business for13 years and moved to TechSpace's West Village facility in New Yorkin September, notes that saving overhead has been a criticalconcern.

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The event production company formerly leased traditional officespace but now relies on TechSpace support staff for a number ofservices that it formerly had to be responsible for on its own.Ivan Hall, production manager for Matthew David, says thatutilizing the support staff means that "We are able to run off-siteto events, knowing that there are people here to accept deliveries,forward our calls, etc." At the same time, Hall points out, "If wedo get a big job, we can expand our office space to accommodate theincrease in staff members for the event, and then drop it after weno longer need the space."

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Another example of a firm that has opted for flexible space isFugu, a technology company providing online and interactive contentfor consumers and businesses. Fugu came to TechSpace's Aliso Viejolocation when the company was launched as a one-man-shop nearlythree years ago and has grown steadily.

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Fugu CEO Jeffrey Greenberg explains that the company hasmultiple servers in the TechSpace data center, hosting Fugu'sentire system. The technology company can increase or decrease theamount of space used in the data center, as well as the size of itsoffice space, as its needs fluctuate.

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In addition to the flexible-space option, Greenberg says, helikes the facility's reception services and other business supportservices. These "took so much off my plate that I was better ableto focus on growing my company," he says.

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