More Office Space Being Geared To Meet Demand From Sole Proprietors

By Victor Ocasio

With the number of sole proprietors on Long Island growing since the recession, area landlords and developers are responding to demand from small and first-time business owners in search of a work space more professional-looking than the kitchen table.

Several property owners are creating options for entrepreneurs, from standard business centers with shared secretarial services to rentals with a boutique-hotel aesthetic, complete with office chandeliers.

YouOffice, a provider of stylish shared office space on Long Island, plans to open four new locations next year, in Great Neck, Rockville Centre, Huntington and Long Beach, and Melville commercial real estate developer T. Weiss Realty expects to open a second Totus Business Center next spring.

“Serviced office” spaces can vary in their offerings, with many operators providing scheduled conference-room time, furniture, high-speed Internet, and shared receptionists or secretarial services for tenants to rent on a daily, monthly or yearly basis.

For many small businesses, especially those seeking large corporate or government contracts, the “perception of capacity,” or the ability to project a professional image, is important, said Erica Chase-Gregory, regional director of the Small Business Development Center at Farmingdale State College.

“It’s the professional consultant that is looking for that place to meet their client,” Chase-Gregory said. Having a professional address or a receptionist to answer calls can be helpful in establishing one’s business, particularly if the entrepreneur is relatively unknown. With an address outside the home comes an “appearance factor” that boosts legitimacy, she said.

The number of those going into business for themselves has grown steadily on Long Island.

According to U.S. Census Bureau data, the number of “nonemployers,” a statistical group that includes sole proprietors, has grown by nearly 10,000 in Nassau and Suffolk counties, from 245,806 in 2010 to 255,520 in 2013, the latest year for which data are available.

Opportunities to network
Stepping outside the home gives those people a chance to network on a regular basis with others, Chase-Gregory said. “Small businesses find that the synergies that are developed in that type of atmosphere are so beneficial to their growth,” she said.

Matt Probkevitz, president and CEO of Cedarhurst-based EquiShares, a real estate developer and operator, began buying up older properties on the Island and turning them into executive office suites in 2002. Since transforming a three-story former movie theater into a 60-office location in Cedarhurst, the company has redeveloped 10 more locations, four of which are branded as YouOffice.

“We found that a lot of people just don’t want to work at home,” said Probkevitz, adding that the “boutique-hotel look” of the company’s YouOffice locations — which rent for about $700 a month for an office suite — adds a level of professionalism and style that small companies and startups find attractive. “They wanted something nicer than they had at home.”

Totus Business Center, at 105 Maxess Rd. in Melville, is another office provider seeking to meet the demand of businesses looking for that professional feel.

The center, which opened in 2001, hosts 61 private offices for rent. Monthly rates depend on the package of services tenants choose, but basic office rentals start at $395 a month.

The business center concept provides companies with a fixed cost, “so that they will know 12 months out how much to the penny it’s going to cost them,” said Ted Weiss, CEO of T. Weiss Realty and president of Totus.

Weiss said his business center is roughly 85 percent occupied, the best since superstorm Sandy, when the center was inundated with tenants seeking temporary refuge from damaged offices after the 2012 storm.

Totus (Latin for entire or whole), recently added seven more offices to the center, and Weiss is planning to add a second 40-office business center at one of his other office properties at 330 South Service Rd. in Melville.

“We’re at a point right now where because we’re so fully occupied and getting strong inquiries, it makes sense to open a new center,” he said.

Positive future seen for sector
The financial outlook for the work-space-as-a-service commercial real estate sector — a category that includes business centers, providers of private work spaces with associated meeting room and communications services, and co-working spaces, which focus on collaborative work spaces on a membership basis — is positive, according to the Global Workspace Association, an industry trade group.

Operators of business centers, co-working facilities and virtual office services saw revenue grow 2.3 percent from 2013 to 2014, according to a GWA survey of 52 companies representing 329 locations around the world. Nearly three-quarters of the respondents projected increased profits after 2015.
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While business centers like Totus provide opportunities for small and startup business owners, established companies also are finding ways to use shared spaces, said David F. Chinitz, chief executive of brokerage firm Park Place Realty Group LLC and president of the Commercial Industrial Brokers Society of Long Island.

“Now you have larger companies hiring independent contractors or temporary employees” to work out of those spaces, said Chinitz, who has based his one-man firm at Totus for nearly 12 years.

Some Totus clients don’t rent physical office space, instead opting for “virtual office” services — such as a receptionist who forwards calls to the client’s cellphone — and renting conference rooms by the hour, he said.

Ralph Gregory, chairman of Intelligent Office, a Denver, Colorado-based provider of virtual office and personalized secretarial services with two franchised locations on Long Island, says technology has fundamentally changed the way people work. “Work space today is anywhere you are,” said Gregory, whose company has over 60 U.S. and Canadian locations. While the company does rent private offices to clients, continuous space rentals make up only about 15 percent of its revenue, with a majority of business coming from off-site secretarial services. “We’re in the information age, and it’s all about communications,” he said.

For graphic designer Tzivia Cohen, who launched a marketing firm last year, many options in the traditional office market proved to be too costly for her fledgling operation. After looking at space close to her home in Valley Stream, she reached out to one of her first clients — YouOffice — for help and rented space in its recently opened 499 Chestnut St. location in Cedarhurst. As a first-time business owner, she said, the decision to separate her personal and work life was the right move.

“It wasn’t a professional feeling to meet in my dining room,” Cohen said.

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