St. Louis Business Journal (October 23-29, 2009)

By Nathan Becker

When Steve Powell opened his AMG Corporate Offices franchise in Des Peres last year, he didn’t know he was headed into business in one of the worst possible climates.

“We cut our ribbon the first month of the official recession in January of ’08 – not the best timing in the world.” Powell said.

As consumers cut spending and became more cautious with their money during the recession, full-service office space providers like Powell have suffered, and they are just now beginning to see potential indicators of a rebound.

“During the first six months of this year, it was really dead as far as new business coming in the door,” he said.  “There was hardly anything happening as far as inquiries at all.”

Powell said the AMG Corporate Offices Group is operating at an occupancy rate around 65 percent.

His AMG branch has about 17,500 square feet of office space to rent to companies, and AMG provides clients full back-office service – including already-in-place phones, internet connection, furniture and a receptionist who answers phones for all AMG-housed businesses, rents anywhere from groups of offices to single cubicles.

“We’re essentially an individual or a company’s outsourcing of their back-office operations,” Powell said.  “All they need to do is walk in and plug in their laptop.  Everything else is provided for them.”

At Office Options, which rents and provides full service to 50 individual offices ranging from 88 square feet to 256 square feet on the eighth floor of the Bemiston tower in Clayton, manager Liz Seymour said occupancy has dropped off over the past year because of the economy.

“We’re still over 50 percent (occupancy), but normally we’re at 90 percent,” she said.  “we do have some people who’ve decided not to renew, or they’ve downsized.”

Seymour said she attributes the dip in rentals and interest to businesses keeping tighter reins on their wallets and being more wary of spending.

“Some people are not making that decision to rent as quickly as they used to,” she said.  “Folks are just being a little more cautious with their money.”

Both Seymour and Powell said they have begun receiving more inquiries in the past few month, and they are hopeful rentals will pick up as the economy begins to stabilize.

“Over the last two weeks, I’ve issued a number of proposals based on inquiries,” Powell said.  “You have to increase the level of inquiries before you can increase the level of business.”

“We’ve all got our fingers crossed and are hoping things are turning around out there economically to see a boost,” he said.  “Our industry is looking forward to a return to a more traditional timeframe in the office business.” 

Seymour said Office Options, which employs five people, has recently spent money on print advertising – a move the company doesn’t usually make – that has drummed up some phone call, but has yet to generate a client.

She said, however, that she has seen a slight increase in clients who use Office Options’ virtual office services, in which a client can pay to use the building’s address, phone and administrative services as well as limited office and conference-room use while not residing full-time in the office building. 

“We have had several clients start out as virtual offices and then have moved into a full-time office, so hopefully more of our clients can go that route,” she said.