Rolling Out The Instant Office

By Michelle Conlin/Business Week 
 
Working anywhere but work is causing a vast emptying out in corporate-land. About 60% of the office space that companies pay so dearly for is now a dead zone of darkened doorways and wasting cubes (see BusinessWeek.com, 3/11/07, "Telecommuting Now and Forever"). "Imagine if a factory had a utilization rate of 40%," says Mark Golan, vice-president for worldwide real estate and workplace resources at Cisco Systems Inc. (CSCO ) That's why executives like Golan are increasingly using a new approach to deal with the fact that one of the largest long-term costs on the balance sheet is often an idling asset.

 
The age of on-demand projects is creating a need for on-demand offices. Just as executives in the '80s and '90s created flexible workforces by outsourcing jobs, today they are creating flexible workplaces with executive suites. Quick shifts in global business currents mean that during one quarter your team might need to be in Minsk, the next in midtown Manhattan. Projects that were supposed to last a few months sometimes linger for years. 
 
The idea of an executive office suite as a static thing is crumbling. But corporate real estate remains an old-fashioned affair of three- to five-year leases that come with heavy penalties for shrinking, expanding, or exiting space. Now companies like Google (GOOG ), GlaxoSmithKline (GSK ), Cisco, IBM (IBM ), and professional staffing firm Spherion are outsourcing chunks of their corporate real estate portfolios to third-party Business Centers specializing in providing serviced office space. That includes info-tech departments, phone lines, sleek furnishings, receptionists who speak the local language, support staff, translators, concierges, and catering—for as little or as long as you need them. 
 
Golan says technology is enabling companies to move more and more of their real estate portfolios anywhere. Not to mention that serviced office outsourcers usually deliver superior services in backwaters. It's hard to justify rolling out the works for five workers in the middle of nowhere. 
 
Think of it as the elastic office.  
 
TESTING THE WATERS  
The Serviced office spaces come with reception areas befitting a modern boutique hotel and lounges loaded with televisions, snacks, and gourmet coffee. Leases can last for as little as a day to as long as tens of years. Because corporations pay for meeting rooms, videoconferencing technology, and support services on an as-needed basis, they typically save about 30% over a traditional New York office 
 
The model is a low-cost way to test new markets. Usually, getting a new office up and running—between approvals, construction, and accommodations—can take six months. When Ginny Forster, senior manager of corporate real estate at Spherion Corp. (SFN ), needed to set up an executive suite quickly in Milwaukee last year to see if there was enough demand for its business there, she picked up the phone and had everything ready in two days.