A Special Interview with US VP, Daniel Soffer
As part of our US Markets series, we asked our own US Vice President, Mr Daniel Soffer, to share some of his personal insights, and try to determine where the serviced office market is headed next.
Daniel Soffer is the Senior VP of the Americas for Search Office Space, and is based in our New York headquarters.
He joined in 1999 as a junior consultant, and has seen real results from his hard work. Progressing to Sales Director in the mid-2000s, Daniel eventually moved Stateside to help the company expand further. Daniel's efforts have proved once again fruitful, as Search Office Space continues to grow in the Americas, and globally.
Jack Cooper, Content Manager (JC): How do you feel the US market has changed over the last five years?
[caption id="attachment_15716" align="alignright" width="300"] Daniel Soffier, Senior VP of Search Office Space USA[/caption]
Daniel Soffer, Senior VP (DS): I first moved over to the States from the UK during the economic downturn of 2008-2010. It was then very much a buyer’s market, with pricing dropping to unprecedented levels not seen since the dot-com crash. However, despite the economic downturn, the executive office industry continued to grow during this period, opening up more and more locations across the US. With rents at extraordinarily low levels, it was a great opportunity for operators to negotiate leases in great markets.
Despite the struggles of the US real estate market, demand continued to strengthen for executive suites. Companies were down-sizing, and as a result of the employment landscape changing, there was a birth of start-ups and entrepreneurs - as well as established companies needing flexible-cost turnkey office space. This has continued since this period, and there is no doubt that our industry is still going from strength to strength.
Our industry is now becoming universally recognized as a viable business solution. We are seeing a shift in the thinking of companies that require large office spaces. We are getting the message across effectively, and collectively, as an industry. It is now at the point that we regularly have traditional brokers coming to us for assistance in helping their clients find executive suites space.
The reason for the increasing demand and diversity in the types of leads we now receive can be attributed to the changes in the types of office space our industry can offer. Over the past 3 years or so, we've seen an explosion of co-working spaces, hybrid solutions, and traditional executive office suites purposed as larger team rooms - alongside the core 1-4 person offices. Our industry is moving light years away from the stagnated, onerous, conventional office space demands, and we all have so much to look forward to. Search Office Space is honored to be a part of this evolution.
JC: Whilst New York City remains the strongest market, which other markets have you noticed strengthening over the last few years?
DS: New York City remains a world leader in executive office spaces, but we are equally as excited to see so many other areas in North America offering exciting office space solutions. For us, demand across the board continues to increase, and the other point is you no longer have to search in a primary NFL market like Chicago or DC to find great locations at high occupancy because of the local demand.
JC: With Regus’ continued expansion, do see this as a positive for the industry as a whole, or a threat to smaller providers?
DS: Absolutely. If the largest operator is growing at a rate this impressive, it demonstrates there's real confidence in our industry; it demonstrates that there's demand; and it justifies further supply. With their marketing strength, it brings increased awareness of what our industry does. When they use industry-specific terms like ‘turnkey offices’, ‘flexible offices’, and ‘serviced offices’ in advertising on television, radio, and out-of-home, for example, it's educating people about our industry.
Increased awareness leads to an increase in turnover, as Regus knows only too well. The industry itself continues to expand inexorably, at a rate faster than Regus has, which gives you a good image of just how rapid the rate is. Because of this, there is plenty of room for smaller providers.
JC: Workstation rates have fallen across the US over recent years. Do you think this is due to competition in the market or a combination of tenants taking larger space as well as the surge in co-working requirements?
DS: If you’d asked me that question in 2010, I would say it was purely down to the economy. But let’s use NYC as an example here: it's the biggest market after London, and towards the end of 2010 we were actually noticing stabilization of pricing and, in fact, an increase in the average workstation rate. This has been attributed to increased confidence in operators, as well as the introduction of more quality office space. The majority of inquiries we were receiving from 2008 through to Q4 2010 were budget driven- now the companies that come to us are increasingly driven by quality of space, and the technology that serves their needs.
So yes - although there is more competition, which does give the prospect more opportunities, it has also resulted in operators improving their product and services. With that increased level of quality, people are prepared to pay more for spaces and services. I don't think we can compare co-working space rates with traditional executive suite rates, as they are hugely different services - even if they can be housed under the same roof.
JC: Which US markets can you see expanding the most over the next five years?
DS: We’ve seen continuing growth in Atlanta, Chicago, Dallas, Houston, Los Angeles, and New York City over the past five years, and don’t see any signs of market stagnation yet. A number of prominent operators have been securing premier space across these markets, and we haven’t had trouble finding affluent tenants scrambling for occupancy.
JC: Do you feel that the more conventional leased rental options are now becoming more flexible to stop the threat from the flexible office industry?
DS: Although landlords are increasingly flexible in terms (something considered almost necessarily in many cases in modern deals), they often lack the expertise and infrastructure to offer the wealth of services professional serviced space brokers can provide. Specialist operators like Search Office Space offer tailored, professional solutions suitable for almost every business scenario. It’d be very hard for traditional landlords to match that level of specialism, and no amount of late-adopted flexibility will change that.