The Disposable Office
By John Arenas

The need for temporary offices and alternative workspace solutions has never been greater… Addressing these needs with disposable office facilities has never been easier.
When New York Life's Eric Cox got the news that his new branch facility would not be ready for six months, it was seen as major set-back. New York Life's fiercest competitor had just opened its own facility and threatened to recruit key managers and customers away. Eric knew he had to move swiftly. He decided it was imperative to open a branch office with managers, agents, and a support group immediately. That afternoon he contacted an executive suite company to inquire about temporary office space. The executive suite was immediately able to provide him with fully furnished and equipped offices, a hoteling function, high speed internet access, sophisticated telephone services and administrative support. This instant access to a first class office facility included 4 offices, 3 workstations, two conference rooms and a visitor's office. The new, but disposable, office for New York Life was in place and ready for business within hours.

Companies of all sizes are redefining the where, when and how of work. They are capitalizing on the new portability of work by adopting alternative work strategies to reduce facilities costs and to increase worker productivity. They are also continuously reacting to short term facilities needs brought about by organizational changes, business combinations and rapid growth. For the corporate real estate manager, continuously redesigning workspace and adopting new technologies is a formidable assignment. Fusing new ways of working with a long established corporate culture can be even more daunting.

Until recently, dramatic departures from traditional office strategy were largely dictated by visionary pioneers who had the power to reshape entire organizations. Understandably, most corporate real estate managers are not yet prepared to champion a bold, alternative work strategy project on their own. However, with help from the executive suite industry, a new group of pioneers is quietly taking a leadership role in the alternative workplace movement. From technology companies such as Microsoft and 3COM to news and financial companies like Bloomberg and Bank of America, companies of all kinds have integrated the use of executive suites as a flexible alternative to conventional facilities.

The executive suite industry (also known as serviced offices or business centers) is the original alternative office, according to Frank Fabish, President of the Executive Suite Association. In fact, designing alternative and temporary workplace strategies has been the industry's core business for over 30 years. The executive suite business is now estimated to be a 2 billion dollar industry in the US, with over 4,000 business centers in the U.S. alone.

The Executive Suite industry has become a sophisticated business enterprise over the past decade, in response to demands of the market place. Once the domain of small companies seeking a big company image, executive suites now cater to the sophisticated needs of fast moving fortune 1000 companies. There are now several publicly held and franchised business center companies having networks that cover the globe. Independently owned executive suites, too, continue to be successful by serving niche markets and specializing in certain clientele such as software companies, or law firms.

Companies of all sizes have recognized the flexibility offered by fully staffed and equipped business centers, and are making them an integral part of their facilities strategy. Hyperion Solutions Corporation, a $500 million provider of accounting, budgeting, data gathering and analytical software to large corporations, regularly bases 40 to 50 field offices in executive suite locations around the world. "Instead of setting up a conventional office, we often use executive suite offices for our field sales reps and consultants," says Vince Laurentino. "It makes sense because we don't have to take a long term lease or pay for construction build?out, phone systems, and a lot of staff support. When we get up to 12 people in a field office, we'll usually set up our own office space."

The Original Alternative Workplace...
Executive Suites

Executive suites are more about providing flexible, productive work environments than about real estate. In fact, more business centers are now providing facilities using flexible service contracts rather than traditional leases. These short term service agreements which can be as short as a month, provide fully staffed and equipped work environments with complete communications support including the latest in LAN/WAN connectivity and high speed internet access. Centers generally offer visitor's offices, private offices, conference rooms and training rooms and range in size from 7,000sf to 20,000sf. Because their core business for the past 30 years has been facilities management for mobile workers, many these centers have developed programs specifically designed to implement and service the client company need for alternative work arrangements. CRE managers can test strategies including virtual office, hoteling, telecenter commuting, etc. without the capital investment.

Static Real Estate vs. Dynamic Workspace

The effort to reduce occupancy costs and enhance worker productivity has fueled interest, along with significant academic research in implementing programs such as Non-Territorial Offices, Hoteling, Telework-Centers and Home-Based Telecommuting.

Cornell, MIT and Harvard continue to contribute theory, modeling, case studies and implementation tools. To date most have focussed on creating in-house solutions for corporate real estate managers. The large consulting firms are also well equipped to shepherd major work strategy transformations from integration of new enterprise software to managing change. Such undertakings are not "do-it-yourself" projects. The tempting gratification from reducing real estate costs and increasing worker productivity must be measured carefully against the very real investment associated with integrating a company-wide alternative work strategy.

Unlike static real estate in a traditional one-worker-per-station model, alternative work strategies require sophisticated mechanisms for real-time adjustments to user needs and preferences. Simple things like making sure phone calls, voice-mail, faxes, email, and overnight packages find the right employee 100\% of the time are critical. This generally means developing proprietary software to keep track of and match people, resources, and communications. It is also important for employees to have a well established, uniform protocol for obtaining the support resources, such as data connections, administrative support, conference rooms or team space. It is easy to see why implementing an alternative work strategy has required a large commitment to design and construct systems to manage the new workspaces and connectivity requirements for many users. The most progressive executive suites companies have made these investments, and are ready to implement such programs on short notice.

Accounting for the Flexibility Factor

With many companies facing continuous reorganization and changing technology strategies, it is unlikely that facilities designed today will be optimal for use 36 months from now. Will departments merge? Will the company merge? Will there be a mobile sales force or a totally new way of reaching customers? These costly changes leave surplus space, obsolete technology, and redundancy in their wake. Accounting for these costs has always been difficult.

Traditional financial accounting methods of benchmarking direct facilities costs can easily be rendered invalid by today's shorter business and product life cycles. The Institute of Management Accountants Statement Number 4BB on the Accounting Classification of Workpoint Costs issued last year was designed provide a way of looking at facilities costs attributed to each knowledge worker. This approach includes the costs of providing technology, connectivity in a variety of workplace settings.

For those who are proposing new workplace strategies these accounting tools can prove invaluable in assessing the costs in homebased, and telecommuting options. The analysis tracks the facilities costs per user. These measures take into account indirect costs of LAN/WAN connectivity, clerical support, access to conference facilities in addition to tenant improvement, FF&E and operating costs. It is suggested in the study that in some cases that the costs of implementing and operating a home-based telecommuting program can exceed the cost of keeping that same knowledge worker at the headquarters facility. This approach proves helpful for evaluating the use of an executive suite for short term or alternative office facilities.

Steven L. Dixon of Commonwealth Advisors, a corporate real estate consulting firm, has proposed that in addition to the direct and indirect costs, a value of flexibility should be factored in. According to Mr. Dixon when the tremendous flexibility afforded by executive suites is considered, a company seeking space for as many as 30 knowledge workers can be better off contracting with an executive suite than creating and managing its own traditional facility. This conclusion could be further extrapolated by including the potential for dozens more workers in hotelling arrangements. This would mean facilities for entire departments or work teams of 50 or more knowledge workers could be established instantly via a short term executive suite service contracts.

The experts tell us that workplace strategies that take advantage of the portability of information and work activities enable companies to have shorter product development cycles, better customer and vendor relationships, and more competitive employee recruitment. Companies have never had more options as they plan to adopt new workplace strategies as a means to creating competitive advantage. The disposable office plans offered by executive suites have now made implementing an alternative work strategy as easy as picking up the phone.

John Arenas, a member of NACORE International,
is President of STRATIS Business Centers,
a national executive suite company
and serves as Chairman of the Public Relations Committee
for The Executive Suite Association.