SMALL CHANGE
Top Executive Suite Operators Keep Things the Same; DBS Only Firm to Post Increase
By MATHEW PADILLA
Companies that manage executive suites are in stasis amid high office vacancies and a dearth of new construction.
But at least things aren’t getting any worse.
The total leasable square feet at Orange County’s top 15 executive suite firms is almost identical to what it was a year ago.
The 15 companies have 976,230 square feet of leasable space, according to the list. That’s less than 1% higher vs. a year earlier.
The figure for No. 9 Corporate Office Centers in Mission Viejo was obtained from CoStar Group Inc.
Times have been hard for executive suite companies, with two major companies filing for bankruptcy in the past five quarters: No. 1 Dallas-based HQ Global Workplaces Inc. and No. 5 Regus Business Centers, a unit of the United Kingdom’s Regus PLC.
Local executive suite firms fared better, avoiding bankruptcy and even keeping a lid on vacancy in many cases.
Some even reported an uptick in interest in the past three months, something also seen in the traditional office leasing market.
HQ Global has the same total of square feet leased as it did last year,166,558 square feet.
The company has been treading water, as opposed to the hit it took a year ago when it closed offices in Irvine, Huntington Beach, and Santa Ana and posted a decline of 25% from its 2001 total.
The executive suite company is set to emerge from bankruptcy by the end of the summer.
The standout on the list is a newcomer: No. 2 Aliso Viejo-based Enfrastructure Inc. Its appearance on the list pushes just about everyone else down a notch.
The company’s first campus in Aliso Viejo is now fully leased, and the firm is working on facilities in New York and Boston, according to James “Watty” Watson, Enfrastructure’s chief executive.
“We want to grow and cluster in regions,” Watson said.
Enfrastructure initially had plans to open campuses in New York, Northern California, Colorado and Europe on its own.
But the ensuing technology downturn and commercial real estate glut dampened those plans.
So eight months ago, Enfrastructure bought New York-based TechSpace Inc., which gave it a couple of New York locations and another in Boston.
Enfrastructure sold off a Toronto operation it acquired in the TechSpace deal.
The company provides just about everything for its tenants, including phone lines and data services, a gym, bar, cafeteria, spa and even sleep rooms.
No. 3 DBS Inc.’s Irvine office moved down a notch, with 124,750 square feet of leasable space.
That, despite the fact that DBS posted the sole increase on the list. DBS’s space rose 1%.
The company has kept occupancy above 90% amid an office market slump, in large part because it didn’t lease to dotcoms in the late 1990s.
“We were not heavily weighted with startups,” said Brandice Rigter, director of operations with DBS.
Rigter said the market in OC has remained flat for the most part, although interest has picked up in the past 60 to 90 days.
“The sales cycle is definitely longer,” Rigter said.
In general, the market is characterized by smaller companies looking for shorter leases and lower costs.
In any case, it’s a wait-and-see attitude among executive suite companies: wait to see when companies regain their confidence in the economy and start leasing again.
Dropping off the list was the former No. 9 Barrister Executive Suites Inc. Barrister’s suites were bought by No. 4 Premier Business Centers LLC in Irvine and are included in Premier’s total.
The sole newcomer was Enfrastructure.
