At the Global Workspace Association (GWA) Conference in Atlanta on September 19, 2013, our CEO Laurent Dhollande and Scott Chambers COO of Pacific Workplaces, discussed their perspectives on what workspace providers can do to maximize revenue.
This blog post reviews the part of the presentation that highlighted the correlation between business center profitability and strength of the virtual office business, so that we can identify, and learn from, over-achievers. Pacific Business Centers was used as an example of an out-performer.
On average, a business center had 56 virtual office clients in 2012, industry-wide, an 8% increase from the prior year. This is based on the GWA 2013 Financial Survey, which can be purchased on the GWA website. The survey also shows that “High Profit Centers,” defined as the top twenty five percentile of business centers in terms of profitability, have 30% more Virtual Office Clients than the industry average (73 vs 56), a statistically significant difference.
Pacific Workplaces, a CloudVO partner with 17 centers, has an average of 108 VO clients per center, or close to 2X the industry average. This is a company-wide average which includes centers that recently opened and others with low VO client counts due to their proximity to another center from the same company. If we select the 3 Pacific Business Centers “leaders” in VO clients count, the average was 222, or close to 4X the industry average. These 3 “leaders” are also the most profitable centers in the Pacific Workplaces portfolio.
Scott explained that this did not happen overnight but was the result of an intense effort to prioritize Virtual Office Sales & Marketing efforts over the last 5 years.
What is interesting on this chart, as Laurent pointed out, is that the more Virtual Office clients a group of centers has, the faster they grow their virtual office business.
Going from left to right on that chart, the growth in VO clients last year was:
- 8% industry-wide
- 9% for the top 25 percentile centers
- 14% for Pacific Workplaces, portoflio-wide, which probably falls in the top 5 percentile
- 17% for the Pacific Workplaces “Leaders”, which falls in the top 1 percentile.
This speaks to the “quasi-unlimited” potential of the demand for virtual offices: if you are a workspace provider committed to the VO business, you can continue to grow that business, whether or not you are already in a position of strength.
Scott, also the President-elect of the Global Workspace Association, emphasized that this performance is achievable by any operator. It is a matter of focus and priority. “Chances are that we have a business center in our portfolio that looks just like yours” he said. The Pacific Workplaces portfolio includes suburban centers (the majority) but also centers located in downtown areas, like in Sacramento, San Francisco, or San Jose, CA, but also in more rural areas in the California central valley or in medium size towns like Reno, NV, or Bakersfield, CA. Furthermore, no Pacific Workplaces is located in a landmark building, which could explain an unusual appeal due to the prestige of the location. “There is nothing truly special about our buildings” he added, “it’s all about proper pricing, packaging, marketing, and good customer service.”
The main question then is, what can we learn from out performers? This will be the subject of follow-up blog posts, that will continue this slide-by-slide comparison.