Flexible space is prized in uncertain times

If you were forced to sum up our current economic environment in a two-word phrase, you could do a lot worse than "poor visibility."

As the largely jobless recovery drags on, the only thing that most businesses seem to agree on is that they have little idea what's around the corner.

In the real estate world, this has created an opportunity for landlords who appeal to this state of mind.

While there have always been corporate suite operators willing to lease space on flexible terms, the approach becomes even more compelling in frugal times.

Over the last week two such spaces were announced in Raleigh, one in the CapTrust Tower at North Hills, and one in a renovated building on Wilmington Street downtown.

The two represent very different ends of a growing market.

The CapTrust Tower

Regus, among the largest providers of flexible work space in the world, will occupy 14,000 square feet on the 10th floor of the CapTrust Tower. The company operates two similar offices in Durham and opened one in Chapel Hill last year.

The CapTrust Tower is among the priciest office spaces in the Triangle, and Regus will offer individuals and small businesses access to it at a fraction of what they would pay if they signed a traditional lease. The space includes shared workspace and 63 private offices.

Rental rates for offices start at $400, and although Regus' typical tenant signs a year's lease, shorter terms are available.

"We are allowing some of the community to get what they wouldn't normally get," said Donna Scott, a regional vice president with Regus. "That's that niche that we're trying to address."

Such a niche does exist.

Jeff Sheehan, senior vice president with Duke Realty in Morrisville, said Duke and Kane Realty, the owners of the building, get calls almost daily from people interested in leasing small amounts of space in the building.

"It's great for corporate users," Sheehan said of the tower. "It does not set up well for a small office user. This fills that market need."

Duke also has a flexible work space operator in one of its buildings on Centerview Drive in Raleigh, and Sheehan said often users of the space will expand and become prospects to take space elsewhere in the building.

Regus offices come fully furnished, and a receptionist at the front desk greets all visitors and handles any IT or phone issues.

The Wilmoore Lofts

There's no such support staff at the Wilmoore Lofts in downtown Raleigh, which offers tenants a similar amount of flexibility but without the same corporate sheen.

The 3,000-square-foot space is above the Wilmoore Café at 223 S. Wilmington St., in a building that owner Carter Worthy renovated with the help of historic tax credits.

Worthy didn't originally plan to turn the second floor into a flexible work space.

"We built it out so that it could be single tenant in the future," she said. "But we thought, 'We'll just try this because it's in this area that has a lot of creative types.' "

The Raleigh Forum, another downtown space targeting similar users, opened earlier this year, also on Wilmington Street.

Office rents at the Lofts range from $495 to $695 a month, and tenants get a fax line, wireless Internet and access to a conference room with a presentation screen.

This is Worthy's first time managing flexible work space, and she acknowledges making it work financially will require keeping turnover to a minimum.

"It's going to be close," she said. "I think it will be good if I can keep pretty good stability."

Three of the Lofts offices have been leased, including one to Brasco Design and Marketing.

Brandon Ives and Brian Batchelor had been operating the company for the past five years from their homes, meeting with clients at coffee shops. Their staff includes a developer who works from home and a part-time graphic designer.

"It gets old meeting at Starbucks," Batchelor said of the company's decision to sign a six-month lease. "Not that there's anything wrong with it."