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Part-Time Office Space

In a pricey market, some small business owners lower costs with shared offices


My Office owner Kelly Sugano
Photo: Karin Kovalsky

Jacob Thorp doesn’t need a sprawling office. The principle broker for Premier Mortgage Capital Inc. doesn’t want one, either.

He’s been there, done that.

A few years ago, Thorp ran a local office of a national company that rented one floor of a downtown office building for $5,000 a month. Later, he headed up another mortgage company that rented a smaller space for $2,300. That seemed reasonable until a $10,000 bill arrived for a single month’s parking expenses for employees and client validations.

He loved the building. He loved the location. But $10,000 for parking?

“For small businesses in Hawaii, doing business can be expensive,” he says.

The company he runs now has only five employees in Hawaii, who mostly work from home or travel to clients’ homes or offices. But occasionally, they simply need a place to meet - with each other or with customers.

Earlier this year, Thorp stumbled upon an interesting ad on the Internet bulletin board Craigslist.org. An upstart company called My Office LLC was renting office and conference room space by the hour, the day or the month. It also offered phone, mail and other business services.

He called.

“I liked it because it was by the hour,” he says.

My Office owner Kelly Sugano had recognized the unmet need for flexibility in the local office market. She runs a wedding coordination business and was tired of meeting in loud, crowded coffeehouses. She wanted somewhere quiet to visit with clients and vendors. She wanted extended hours. But she didn’t need a full-time office.

She searched Oahu for somewhere that might fit her needs, but nowhere seemed to offer the early morning, late evening and weekend hours and services important to her business. Sugano decided to create an affordable, professional place she and others could use exactly when they needed it.

After scouting locations for months, she found a vacant office tucked a couple of blocks behind Ward Center. She fixed it up and opened the doors in April. It’s not fancy–no marble floors, no elevators, no expensive waiting room. It’s comfortable and friendly with a candy dish on the bookcase, plenty of free parking and well-equipped, professional offices and conference rooms.

Standard hours are 9 a.m. to 5 p.m. Monday through Friday. But with a little notice, someone can be there to answer phones and greet members and their customers until 8 p.m. on weeknights and from 9 a.m. to 4 p.m. on weekends. If a client occasionally requests even earlier or later hours, Sugano usually can arrange it.
 

My Office has two conference rooms and six offices, three of which are being rented by the month.
Photo: Karin Kovalsky
“We have been in here at 5 a.m.,” she says.

My Office has two conference rooms and six offices, three of which are being rented by the month. A wet bar allows clients to bring in their own refreshments, rather than hiring an expensive caterer. So far, Sugano has about 35 clients. Some only take phone and mail services. Others pay $300 a month for those services, plus access to office and conference room space. Members book the rooms themselves online.

Sugano says she is operating at just under 50 percent capacity, but expects in a few more months to hit a comfortable and profitable 75 percent.

Premier Mortgage Capital has been using My Office for several months now. So far, so good. The company didn’t buy an official package, opting instead to pay for monthly mail, Internet and phone services and a la carte room rentals when it needs them. Between weekly staff meetings, training in the conference room and other uses, Thorp estimates that his company spends between $300 and $500 a month. My Office also has 10 parking stalls available and ample street parking.

“It really works for us because everyone in our company is pretty independent and we don’t need to be in an office all the time. ... It’s not the perfect setting for every business, but I think it’s great for small businesses that just need that office feel,” Thorp says.

Jane Sawyer, a spokeswoman for the Small Business Administration in Hawaii, recalls similar setups about 15 years ago. But as more office space became available, the shared spaces evaporated. “I think probably that the high cost of office space and the lack of office space is what’s driving this resurgence,” she says.
Honolulu has some of the highest office space and parking costs in the country. The average asking price for office space here is $2.69 per square foot, per month, including building operating expenses, says Mike Hamasu, director of consulting and research for Colliers Monroe and Friedlander Inc. That means a 2,000-square-foot office would average $5,380 a month, not including parking. That’s the 13th priciest in the nation, Hamasu says. Parking is worse, with the latest figures putting Honolulu in ninth place.

Overall, office vacancy rates are only 6.91 percent. “Our market is pretty tight,” Hamasu says. That places landlords at an advantage–they can raise rents, knowing that it may be difficult for their tenants to find other affordable options, he says. But alternatives are starting to surface.

Before My Office, there was Corporate Office Centers. The Arlington, Texas-based company offers executive suites and many business services in Restaurant Row. Corporate Office Centers opened its doors there in 2000.

And on July 28, a new player entered the market: Resource Suites. Located in the Waikiki Landmark building, it is now offering virtual office services. Construction is expected to finish in December, when 14 offices, 15 cubical workspaces and two conference rooms will be available.

Managing partner Daniel Kaneshiro says Resource Suites will be bilingual, offering services in both English and Japanese.

Judy Harbottle, a senior account manager at the Chamber of Commerce of Hawaii, said these types of arrangements aren’t for everyone.

For one thing, paying for any office or service will be more expensive than working alone from home, she says. But for businesses looking for a middle-of-the-road office solution, this may be just right.

“Money is tight and people are looking for solutions that won’t be as expensive. ... There is definitely a market for this.”

My Office owner Sugano believes the biggest challenge is getting people out of the mindset that they need a whole office to themselves.

“If we all join forces ... that’s how everybody grows,” she says.

 

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

May 3, 2008 10:14 pm
 Posted by  Mike

looking for 750sq ft

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