Commercial Property/Business Centers; Modern Office for Rent: Daily Rates Available

By JOHN HOLUSHA/ NY times

Published: Sunday, May 20, 2001

The illusion is quite convincing. The lobby is spacious, with a staffed reception desk, a waiting area with comfortable seating and wide hallways. If a call comes in for the XYZ Corporation, the operator answers, ''Thank you for calling the XYZ Corporation.''

There are conference rooms for meetings with clients, file cabinets with digital locks and word processing and other support services. If a visitor arrives, he or she is escorted to an office for a meeting.

But what appears to be an bastion of Corporate America may only be a 150-square-foot office rented for a few weeks or months. This is an executive office suite, the modern version of the serviced office spaces that have been around for about the last 30 years.

A professional Manhattan business center converts the fixed costs of entering into a long-term lease, designing and building space, acquiring telecommunications and computer equipment and hiring a staff into a variable cost for clients who use the offices for short-term renewable periods. The rental rate for such space is higher than for raw space and all services are additional expenses, but a client has the advantage of buying what it needs and no more.

others in the business say larger companies are being attracted to executive suites because they allow them to conserve capital.

''The executive office suite business has been around for about 30 years and evolved from call-answering centers for traveling salesman,'' said Gary Kusin, chief executive of HQ, which is largely owned by the Frontline Capital Group, an affiliate of Reckson Associates Realty, a real estate investment trust based in Melville, N.Y..

He said the business changed in the mid-1990's toward one that is more service oriented because of three factors. First, he said, was improvement in communications technology, which allowed executives to be based closer to customers and farther from headquarters. Another consideration, he said, was the globalization of business, which required offices around the world. Finally, he said, there was the trend of outsourcing noncore operations, including traditional office space and the associated services.

''That is what converted executives office suites to office services,'' he said.

A New York business center operator typically leases space on a long-term basis from a landlord and subdivides for clients or enters into a joint venture with the building's owner, which conserves capital and allows more rapid expansion. The serviced office space is fitted out with offices as small as 150 square feet, which would otherwise be difficult to find. Instead of a thick, complicated lease, the space is rented on a license agreement, like a hotel room, and can be paid for by a credit card.

THE offices are furnished and equipped for telecommunications and Internet access. Typically, the rental rate is higher for short-term occupancies than longer ones, but if an executive needs an office for a few hours to conduct job interviews in a given city, New York business center executives say, they are prepared to accommodate him.