More Companies Rent Virtual Offices

Alan Rappeport, www.ft.com, 11.05.09

The collapse in commercial property prices is encouraging entrepreneurs to set up "virtual" offices at prestigious addresses, renting space by the month, the week or even the hour.

Landlords are providing such offerings as a way to fill space during hard times, allowing tenants to rent over short periods rather than locking them in for years at depressed rates.

Virtual users get the flexibility to use an office or conference room as needed. They can hold meetings, receive mail and have their telephone calls answered by a receptionist who will put them through to more humble home offices in distant locations.

The interest towards the renting of virtual offices is also expected to increase in Bulgaria. This service has already been offered on the market for a few years.

The growing interest comes as office rents in the US fall and vacancies rise in line with unemployment. Reis, a property research company, predicts that office vacancies will reach 15.2 per cent in the US this quarter. Even in Manhattan, where space is notoriously hard to find, the vacancy rate is approaching 10 per cent. With new jobs scarce, financially-pinched entrepreneurs starting new businesses want the credibility that a virtual office can bring.

New clients for Regus, the biggest virtual office provider in the US, were up by 38 per cent in March from the year before. At Rockefeller Group business has doubled in the past six months. The downturn has also benefited smaller providers, such as City Space Suites, which has office space in New York's Chelsea and Union Square neighbourhoods and says its offices are 95 per cent occupied.

"Some people don't need an office, but they need an address," Mr Watler said. "Rockefeller Center in New York is better than Mockingbird Lane."

Such was the case for Richard Wolfman, who runs Global Group Ventures, a new commercial mailing company, through a virtual office in Garden City, New York. He spends $240 a month for an address provided by Intelligent Office, where he can collect mail and have a receptionist handle his calls. A frequent traveller, he can also use the company's spaces in other cities across the US, making his business seem more national when he meets clients.

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