Suites Help Small Firms Look Larger Than Life
Stepping out from a bank of elevators in one of Glendale’s most prestigious office towers, the federal immigration investigator peered incredulously at the plush furnishings in the expansive lobby.
With its shiny marble floor, thick gray carpet and sumptuous black leather sofas, the reception area was a far cry from what the agent expected of the fledgling construction company that he had come to visit.
“Do I have the right address?” demanded the investigator, thrusting the construction company’s business card toward a receptionist.
Yes, indeed, she assured him. The investigator was awed. He noted the decorator wall coverings, original prints and silk floral creations, then asked, “Do they own all of this?”
The lobby isn’t, in fact, the reception area for a single construction company. Rather, it serves 53 businesses that lease space--called “executive suites”--from Headquarters Companies. An additional two dozen businesses, whose phones are answered by staff at HQ, don’t have an office there, though they can use the company’s facilities for meetings and conferences.
After only a year in Glendale, HQ has doubled its space by leasing a second full floor in the sparkling new 21-story office tower at 550 N. Brand Blvd. The company, which manages the seventh and eighth floors, specializes in subleasing space to corporate branch offices and independent professionals and entrepreneurs. Clients of HQ are among a growing number of companies, both large and small, that are operating out of “executive suites” rather than traditional offices with traditional staffs. At HQ, all of the staff is supplied by the management company. Businesses share the cost of common space, such as the lobby, conference rooms and lounge.
The immigration investigator’s false assumption that the lobby and a full floor of offices belonged to a single business is an impression fostered by the HQ concept, which offers a corporate image at a prestigious address at a fraction of the cost of a traditional office.
“If somebody wants to think that I have a large floor of offices in Glendale with a big reception lounge, I won’t say anything to dispel those beliefs,” said Ara Najarian, an attorney who leases a suite of three offices from HQ. “First impressions are an important part of practicing law. If people think that you’re doing well, that is more power to you.”
All businesses in the HQ facility share a team of receptionists, telephone operators, secretaries and clerks who work with the latest and most sophisticated equipment and computers. An outsider would easily assume that a professional in the HQ facility is backed by a personal staff of efficient workers. In reality, the staff caters to a large number of bosses.
Telephone operators answer each call with the name of the company that was dialed. “Good morning. Law offices of Rick Mooradian. How may I help you?” says the voice on the phone. Two seconds later, the same voice answers, “Morningstar Records.”
A computer screen automatically flashes before the operator, telling her the name of the company that is being called, a list of the people who work for the enterprise and their current status--out for lunch, gone on assignment, busy in an interview or working at home.
If the business representative is in the office, the operator will announce the name of the caller. If not, a computer message is relayed to the firm, even if it does not have an office in the building. The caller is left with the impression that he has spoken to the company’s personal secretary.
The concept is nothing new--attorneys have leased offices with common support staff for at least two decades--but the idea has caught fire only recently among other professionals.
Chain of Centers
The Glendale complex is one of 10 centers operated by a Southern California licensee, Intelligent Building Services of San Diego, which also recently opened a center in Warner Center in Woodland Hills and plans to open three more--in Burbank, West Covina and Torrance--in July. Ten other HQ business centers are in the Southland, managed by other licensees.
There are 81 centers operating nationwide under the HQ trademark, owned by HQ Network Systems of San Francisco. The first international center was opened this month in London, and another is scheduled later this year in Tokyo. A client at any one of the centers has the right to use facilities and staff at any other center.
The network is designed so that a business, operating out of a home in Oxnard, for example, can instantly claim home offices not only in Glendale, but San Francisco, San Diego, New York or any of 50 other major cities.
Cynthia Bronte, vice president of marketing for the San Francisco parent company, said executive suite centers have been multiplying at the rate of more than one a month for 2 1/2 years.
“The greatest interest is coming from major corporations”--such as Ford Motor Co. and General Electric--which account for 50% of the new clientele in executive suite leasing, she said.
Other Firms
HQ is not alone in the field--dozens of other property management firms also offer executive suites in major cities--but the company network is recognized as the industry leader.
“This no longer is a business just for the beginning entrepreneur or small businessman,” said David Bourne, chairman of Intelligent Building Services. “This is really a hit now with major corporations, especially those based on the East Coast.”
Bourne estimates that companies save about a third of the cost of opening a branch office. They don’t need to hire secretarial help, pay health benefits or worry about staff management. Business machines, including telecopiers, computers and telephones, are supplied, operated and maintained by management. If a tenant wishes, he can even rent a furnished office.
The support staff can sort mail, answer correspondence, send documents by special mail and perform any of the duties expected of a large-scale, traditional office.
The services can be obtained for as little as $200 a month for a firm that purchases a “business identity plan” in which it lists the Glendale building as its headquarters and a local phone number, even though it does not have an office there.
‘All the Benefits’
In addition, client companies can reserve a conference room for a meeting or special presentation or use a ready-made guest office in any of the centers in the network, officials said.
“The point is that a small company or branch office has all the benefits of a major corporate office without the huge costs associated with that environment,” Bourne said.
There are drawbacks to the system. Companies pay for services on an as-needed basis, but the cost of support services is high. Businessmen are billed 25 cents a call for all phone calls exceeding a monthly allotment. Use of a telephone facsimile machine can cost as much as $4 a page. A Telex message is $5 for the first 15 words, and the charge to have mail opened and read is $1 per piece.
“I try to limit those expenses,” said Najarian, the Glendale attorney, “because that’s where they get you.”
There also are advantages, HQ officials and clients said.
Small Offices Available
Companies, which would be required to lease at least 1,000 square feet in a traditional office building, can rent an executive suite as small as 150 square feet at HQ. As the company grows, it can expand into as many as six offices without hiring its own secretarial staff. In addition, companies can lease an executive suite on a month-to-month basis, avoiding the traditional long-term lease and giving the company greater flexibility for future expansion.
Bourne said the idea is becoming increasingly popular among companies serving large metropolitan areas. “In Los Angeles, with all of the traffic congestion, companies like to have their people close to clients and close to home,” Bourne said.
Attorneys for Bezaire Law Offices are stationed in nine HQ offices across Los Angeles, including Glendale, because the branch offices are more accessible to clients, said Craig Smith, general manager and marketing director. The company, which uses the conference rooms for its frequent seminars on living trusts, has “found that most clients will not travel more than a 50-mile radius from their home to a business,” Smith said.
Zorik Mooradian, a business-litigation and personal-injury attorney who had offices in Tarzana and Encino before he moved to HQ in Glendale five months ago, estimates that he is saving about $1,000 a month over his previous office maintenance and support staff costs. “This facility is very suiting, with very little overhead,” he said.
Answering Service
John Schroeder operates his environmental regulation consulting business out of his Glendale home but said he signed up with HQ several months ago for its telephone answering service. As a bonus, Schroeder said he can use an instant office or conference room in the Brand Boulevard tower--or any other HQ center--if he needs it.
Gary Forstall, a Glendale resident, launched his financial planning business, Gemstar, in the HQ offices six months ago because he said he wanted a tony address.
“A high-profile image is important to me,” Forstall said. “I can see the kind of prestige an address holds in my business.” As an HQ client, Forstall has the option of arranging a meeting with a Westside client, for example, in the HQ offices of Fox Tower in Century City, just two floors below the offices of former President Ronald Reagan.
“The clients coming in to see me are impressed,” he said. “I guess they have the concept that I have the entire floor.
“That’s good for my ego.”
