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Owners finding new amenity.

A tenant at Manhattan's Chanin Building who needs 10,000 square feet of office space every day and 2,000 square feet of conference space once a month can take advantage of a new service offered in this Midtown building.

Now, the tenant can sign a lease for 10,000 square feet and make use of the fully-equipped conference room at the 27,000-square-foot Alliance Business Center located in the Midtown building at 122 East 42 nd Street.

In addition to being a stand-alone entity that provides its own clients with smaller flexible office space and support services, the center is tied into the full-service image of the building, said David Beale, president, Alliance Business Centers, which has a long-term management contract to operate the center for owner Stanley Stahl.

"It's been very successful with melding what Koeppel Tener Riguardi is doing with leasing the whole building," said Beale.

The center had its grand opening in November and is now 70 percent occupied.

"As a product we have to have the ability to offer a total package," said John Brod, managing director, Koeppel Tener Riguardi, and leasing agent for the Chanin Building. Koeppel Tener Riguardi also manages the building. Tenants may also make use of the telephone answering system, word processing and other services the center offers to its clients.

In Rosemont, Illinois, outside Chicago, Alliance operates a 17,000-square-foot center for Heitman Properties that serve 150 clients on a full- or part-time basis. That center, which is more than 90 percent occupied, was started by another concern that was not successful at it.

"They came into an operation that wasn't [doing] what we wanted it to do and they basically turned it around, said Jeff Annenberg of Heitman.

According to Alliance Chief Operating Officer Lawrence Tanenbaum, the company is forming relationships with more and more developers because of the increased services they are need to offer in the competitive marketplace and the increase in the number of tenants of 2,000 square feet or less.

"These centers are going to be the only viable alternative to these space users, Tanenbaum said.

And while a number of developers have tried to start their own centers or attempted to operate a center in their building, Tanenbaum said, they eventually realize that the business centers, while they act as a complement, are themselves not real estate organizations.

"Developers are going to realize real fast this isn't the business to get into," he said.

But, Beale, said, "It's not right for every location. It's not right for every building."

In all 28 centers bear the Alliance Business Center brand name. Tanenbaum and Beale have a financial interest in 14 of them -- one in Fort Lee, four in Washington, DC, one in Reston, Virginia, one in Costa Mesa, two in Chicago and a sales office in Dallas -- and there are 14 other affiliates with their own exclusive territory that enjoy reciprocal use and share in advertising. The affiliates are located in Houston, Atlanta, Minneapolis, Parsippany and Mt. Laurel, New Jersey, among other locales.

As business centers continue to grow in number and popularity, Alliance is attempting to unify operators by entering into referral agreements with "associate" firms. They currently have 240 associates that participate in a referral program and pay a dues that contributes to overall marketing. Eventually, Beale said, they hope to convert these members to "preferred" status where their dues will go toward advertising and the creation of a directory that will be issued to 10,000 corporate decision makers.

"You have to somehow associate yourself with a national organization that can provide marketing assistance and referrals," said Tanenbaum.

Beale added: "They would have to spend years re-inventing the system we already have in place."

But, Beale said, since they are not a franchise and cannot control the operations of these firms, they are very selective about who they become affiliated with.

"They understand the marketing and sales not only in our business but in the business of our clients," he said.

In addition to providing flexible space and a "bigger" image for their clients, Beale and Tanenbaum say, Alliance "facilitates" their businesses and helps them in the marketing process with: Prospect tracking, direct mail, telemarketing, mailing list maintenance, logo design, etc.

"Everything we do is very focused on getting results for our clients," said Tanenbaum.

Each center's general manager, say Tanenbaum and Beale, come up with creative ideas. And, under the direction of consultant Sonny Moyers, former national marketing director from AT&T, they advise clients on how to best spend their marketing and sales dollars.

Tanenbaum and Beale report that occupancy is 90-plus percent at their other Manhattan centers -- 230 Park Avenue, 26 Broadway and 599 Lexington Avenue -- and that the average stay for a tenant is getting longer and longer.

"It's an indication of what the future can hold for this market," said Beale.
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Title Annotation:owners of Chanin Building at 122 East 42nd Street, New York, New York, offer additional space for conferences on temporary lease basis
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Aug 11, 1993
Previous Article:Survey: Manhattan leasing steady in '93.
Next Article:Sotheby's selects affiliate.

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