TechSpace operates facilities here as well as in Boston and New York City where it provides a flexible full-service office environment with technology support through a Tier 1 data center. Flexible lease terms allow room for upsizing or downsizing as necessary, including everything from workstation furniture, advanced voice and data telecommunications, IT infrastructure, reception services and office supplies. The approach is designed to provide tenants with the capability to grow their businesses without making a long-term commitment to occupancy or a capital investment in the space.

CEO Guy Pickrell of TechSpace tenant NationStaff says the long-term commitments of traditional office space are really difficult for start-up companies like his, which has changed its space 10 times with TechSpace. "We would have been in some tough binds if we didn't have the flexibility to change our size," says Pickrell, whose company offers executive search and consulting services for the financial industry, with a focus on financial technology.

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

Another factor generating more businesses for firms like TechSpace is that changing economic conditions have greatly reduced the sales of office condominiums and small buildings to users who at one time were snapping up buildings almost as fast as developers could build them. Brokerage firms say that cash-conscious business owners, rather than sink their capital into buying a building, are opting to lease space and hold onto the capital to operate their businesses while they take a wait-and-see attitude toward the economy.

Uncertainty about the economy is one of the reasons that companies like TechSpace tenant Matthew David Events have turned to flexible space. Matthew David is an event production company that hosted corporate bashes for companies like JP Morgan and CNN before financial industry woes reduced its clients' budgets and hence its need for office space. The company, which has been in business for 13 years and moved to TechSpace's West Village facility in New York in September, notes that saving overhead has been a critical concern.

The event production company formerly leased traditional office space but now relies on TechSpace support staff for a number of services that it formerly had to be responsible for on its own. Ivan Hall, production manager for Matthew David, says that utilizing the support staff means that "We are able to run off-site to events, knowing that there are people here to accept deliveries, forward our calls, etc." At the same time, Hall points out, "If we do get a big job, we can expand our office space to accommodate the increase in staff members for the event, and then drop it after we no longer need the space."

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

Fugu CEO Jeffrey Greenberg explains that the company has multiple servers in the TechSpace data center, hosting Fugu's entire system. The technology company can increase or decrease the amount of space used in the data center, as well as the size of its office space, as its needs fluctuate.

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

Instant Insights /

Tenants Seek Flexibility to Weather Uncertainty

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