Why businesses are turning to ‘virtual offices’

By Ed Zwirn

(First published on April 3, 2017 in the New York Post)

Looking to situate your business at that prestigious address without paying prestigious rent?

A growing number of business clients — ranging from solitary millennial entrepreneurs to multinational companies — are turning to the services of “micro” or “virtual” office providers in a quest to either establish themselves, impress clients or backers or set up branch offices on the cheap.

For as little as a $50 monthly membership fee and a $250 month-to-month lease, Marcus Moufarrige, chief operating officer of Servcorp, says that the next Elon Musk can set up a “virtual office,” just to receive mail.

If they want to enjoy genius-inducing creature comforts like cappuccino, couches and free WiFi at the so-called “co-working spaces,” that’s an additional $450 a month at either financial district locales like the World Trade Center and 17 State St., or Midtown meccas such as the Seagram Building and 1330 Sixth Ave.

In an automated update of the old dodge of renting a mailbox at a high-class address, “virtual offices” provide a business with its own dedicated receptionist guaranteed to respond promptly to every one of your leads and with the special attention you want each one to get, Moufarrige says.

Beyond that, and of course higher up the price scale, companies can secure actual mid-sized offices and even conference rooms and executive suites starting at $1,000 monthly.

“It’s often said that nine out of 10 small businesses go under,“ says Moufarrige. “But what kills small businesses that are not household names is the cost of hiring people and the cost of rent. It’s not necessary to have your own lobby and your own office.”

Servcorp started in Australia in 1978 and only began establishing a presence in this country in 2010. It now has 22 sites around the US, including the four New York City locations, and 150 around the world.

In the Big Apple, this presence is dwarfed by the much larger footprint established by WeWork, which has 38 locations in the city (including four in Brooklyn and one in Queens) and offers similar sets of amenities (e.g., a private Madison Avenue office for as little as $850 monthly, or $650 if you just want your own desk).

“At WeWork, our mission is to provide the space, community and services New Yorkers need to make a life, not just a living,” says Rui Barros, WeWork’s tri-state general manager. “Our We membership is the perfect option for creators on the go — it includes access to our diverse, global community through our own digital member network and enables members to book work and meeting spaces at many of our locations worldwide when they need it.”

Moufarrige says that what companies like Servcorp and WeWork are doing is “certainly disruptive to the commercial real estate sector.”

But there are skeptics, especially considering the size of the business.

“The micro and virtual office sector in New York City is an even smaller subset of the co-working space providers, who lease less than 1 percent of the total city office stock of approximately 450 million square feet,” argues Mike Tepedino, a senior managing director for the New York office of HFF, a firm that provides financing for commercial real estate. “These providers have been around for some time and have minimal impact on the macro commercial environment in the city.”

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About Ed Zwirn

Ed Zwirn is a journalist/editorial professional with a focus on financial trends and practices. He lives out in the woods in Bethel, NY, not far from where the Woodstock Music and Arts Festival was held in 1969. As a financial writer, his work has appeared in The Wall Street Journal, The New York Post, CFO Magazine and news services including Dow Jones Newswires and Informa Global Markets. Ed also spent three years in Ukraine, where he ran an English-language news service. He now divides his time between his freelance journalism, song and poetry writing, and barbequing and lawn-mowing on his 2.5 acre property.

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