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Corporations increase use of executive suites.

The executive suite industry grew modestly in 1992 in spite of the economy. As in the previous year there was much consolidation with small, independent operators joining together into loose associations to find strength in numbers. Moreover, with credit continuing tight, it was difficult for outsiders to enter the industry or for small operations to expand.

But for established operations with solid credit, expansion was attractive. In the depressed real estate market, good deals were available. In 1992 Headquarters Companies (HQ) -- the largest executive suite firm in the world -- added 15 new business centers in 8 countries to bring its total to 115.

In 1992 HQ opened three new centers in Manhattan. With these additions the company now has seven centers in the city at 666 Fifth Avenue, 730 Fifth Avenue, 237 Park Avenue, 53 Wall Street, 300 Park Avenue, 1120 Sixth Avenue, 1285 Sixth Avenue. The latter three were added this year.

Much of the growth has come from the Fortune 1000. Larger companies are coming to see the advantage of executive suite firms and other executive suite firms as corporate real estate managers become familiar with the services offered. A short-term agreement on a fully staffed and equipped office is an ideal way for many corporations to set up branches or other field offices without making a major investment in money or in time.

Increasingly we find that corporate managers are using executive suites as an efficient, cost effective, and flexible way to enter new markets and add new operations. They can make an across the board decision to use HQ and then let the individuals involved in each city work out the details.

Brokers also earn points for serving clients who later want their own space and remember the service the broker provided.

By saving brokers time, firms like HQ make it easier for them to focus on the bigger deals that will support them. Over the last two years we've increased the deals we've closed as a result of broker referrals by 300 percent.

To continue to appeal to the real estate community and the Fortune 1000, any executive suite firm must depend on the quality of its facilities and the professionalism of its staff. More than

anything else, service and location is critical to success in our industry.

With this in mind, HQ has a simple game plan: Increase the number and quality of our locations and continue to define and redefine our service.

To continue to grow, we must stay ahead of the needs and expectations of our clients. For example, over the last year we've wired all our facilities into the future. We can now handle virtually any state-of-the-art data processing or telecommunication requirement clients present from LANS to teleconferencing to Quotron without any need for special installation or wiring.

And next year we already have new facilities scheduled for Paris, Hamburg, Berlin, Bogota, and Guadalajara.

The reason for the continued health and expansion of the executive suite industry is not difficult to understand. In providing fully equipped and staffed offices with short, flexible leases, executive suites are an ideal choice for companies and individual entrepreneurs that are downsizing, starting up, or expanding and don't want to invest in staff, equipment, or a long term lease.

Since businesses are always growing or shrinking or starting up whether times are good or bad, executive suites always have an appeal. As our industry has matured, this appeal has grown. We've expanded throughout bad times and expect to continue to grow as the economy picks up. And if it doesn't pick up, we still expect to grow.
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Title Annotation:Review & Forecast, Section II; rental and leasing of commercial office space increases in New York, New York
Author:McWhorter, John V.
Publication:Real Estate Weekly
Date:Jan 27, 1993
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