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Office suites impacted, but weathering the storm.

The real estate environment of the 1990's is bound to be influenced by an increasingly complex set of factors - criteria driven by business efforts to enhance office productivity yet decrease the bottom line.

With the guarded knowledge that the executive suite industry is in the throws of what might be termed a shakeout, an interview was conducted with Gloria Bayes, Vice president of operations for The Office Gallery, an executive suite company with locations in Rutherford, Princeton and Bridgewater, to share her thoughts in where she feels the industry is headed.

Q. What is the status of the executive suite industry?

Bayes: There have been several changes in the business during the past six years since the Office Gallery established its first location in Princeton, New Jersey.

First and foremost, the high vacancy rates in the real estate market have directly impacted the executive-suite industry. Because certain areas of the state are overbuilt, the sublease market has become a factor and is beginning to impact on our industry.

In the past, executive suites never had to compete with subleases. Now we do. Because of the downtown the country has been experiencing for the past year and a half, prospective tenants are looking even closer than ever at the bottom line, and reevaluating their options.

Although subleases may be an attractive option for certain organizations, the executive suite is still a very viable alternative, particularly for those companies, that need to present a legitimate, professional image to their clients.

Another way the executive suite industry has been impacted, is by the revolutions in the communications industry. Fax machines, computers and copiers are now commonplace; today's business cannot function without them. Therefore, the industry has been knighted with the purpose of finding and devising new services and amenities with which to lure new business.

At The Office Gallery, for example, we recently aligned with the Global Office Network, a member-owned association with executive suite facilities throughout the U.S., Canada and Europe. With new opportunities opening up in the European Economic Community, we feel this service provides our clients with a competitive edge in bridging that market by giving them the opportunity of utilizing offices and service around the world.

Q. How do current occupancy rates compare with last year's?

Bayes: In terms of occupancy rates, last year's occupancy rates were definitely higher. At the beginning of the year, we began to see a drop-off again. But in recent weeks, with the economy strengthening, we are beginning to see more activity.

Q. What marketing efforts has The Office Gallery implemented during the past year to boost occupancy rates at its three facilities?

Bayes: We have begun targeting our efforts to a broader audience of prospective tenants, specifically , outplacement firms, "rightsizing' companies and entrepreneurial ventures.

To do this, we're retained the services of a public relations firms to craft a pro-active program focusing on the viability of executive suites. Another component of the program is geared towards publicizing our newly refurnished Rutherford and Princeton facilities. Our third facility, located in Bridgewater, NJ, was opened in 1986.

In an effort to boost awareness of The Office Gallery among key small business decision makers, we recently cosponsored a major radio promotion campaign tailored to entrepreneurial Dads for Father's Day.

Q. What trends do you forecast for the remainder of 1992?

Bayes: The indications are there: The economy is turning around. As the momentum continues to pick-up, I believe we will see business return to hiring, and expansion plans, once on hold, will soon be underway.

What does this portend for the executive suite industry? It means that now is a propitious time for executive suite lessors to expand their business and negotiate favorable leases with their landlords, before vacancies begin filling up.
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Title Annotation:Review and Forecast, Section V; New Jersey's The Office Gallery, executive suite company profiled
Author:Bayes, Gloria
Publication:Real Estate Weekly
Date:Jun 24, 1992
Previous Article:Excess space, high hopes in office market.
Next Article:Leasing now aggressively competitive.

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