Despite recessionary lows caused by business closures, the industry has grown steadily since 2008
Los Angeles, CA (PRWEB) February 21, 2013
The Serviced Office Leasing industry is growing; nevertheless, it was not impervious to the recession that caused financial struggles among its key downstream markets. The Serviced Office Leasing industry provides businesses with renting and leasing workspace options, including fully furnished offices, virtual offices and conference and meeting rooms. Its end-users include start-ups and Fortune 500 companies, and particularly those in the professional, scientific and technical sectors. During the recession, demand for this industry's end-users declined as business activity plummeted in light of tightened access to credit and declining business sentiment. “Additional factors on the consumer side, such as falling employment rates and per capita disposable income, further aggravated the existing business climate,” says IBISWorld industry analyst Radia Amari. However, in 2011, business activity began to grow again, supported by rising corporate profit and a growing number of businesses. Consequently, industry revenue began to rebound. Over the five years to 2013, industry revenue will increase at an estimated annualized rate of 1.7%, which includes growth of 4.5% in 2013 to total $1.8 billion.
There are currently an estimated 242 companies that provide serviced office leasing options; these companies include global giants, such as Regus. Over the past five years, the number of industry companies has remained flat; however, from 2011 to 2013, the number of companies will rise at an estimated average annual rate of 1.2%. The discrepancy in growth rates is a result of the recession, which resulted in a number of companies exiting the industry because of an inability to effectively compete. However, since the economic renewal began, a rising number of companies have entered the growing Serviced Office Leasing industry, benefiting from renewed demand brought on by rising number of businesses, corporate profit and workspace trends.
Over the five years to 2018, the industry is expected to continue its strong growth, likely benefiting from a changing workforce that includes more telecommuters who will likely rely on virtual office spaces and conference rooms. However, future growth will be hampered by increasing levels of competition. Industry companies face significant external competition from substitute office spaces, including traditional office space, home offices, business suites in hotels and airports and “third-place” work areas, such as coffee shops. The Serviced Office Leasing industry has a moderate level of market share concentration, with the largest industry firm, Regus, accounting for an estimated 56.4% of total revenue. Other companies, such as Servcorp and Alliance Business Centers Network, operate on a national scale but are not estimated to hold significant shares of revenue. According to Amari, industry concentration is kept at a moderate level by the prevalence of smaller companies in specific metropolitan markets and by the high initial costs needed to open a serviced office. Many companies are able to open one location or offer only a few floors for rent or lease, which allows them to service a small number of clients in a given area but does not create a large enough cash flow to fund the opening of more locations. As the industry expands during the next five years in response to the growing number of mobile workers, market share concentration is expected to fall somewhat as a larger number of small-scale office leasing firms enter the industry. For more information, visit IBISWorld’s Serviced Office Leasing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry rents or leases fully furnished office space to businesses on a part-time or as-needed basis to a myriad of businesses ranging from start-ups to Fortune 500 companies. The industry also provides virtual office and conference room leasing options. Companies that provide conventional commercial leasing options are excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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