Da Vinci takes Virtual Offices back to the UK
Copyright: David Lawson
Published in Property Week June 2009
It can be frustrating to look back on great ideas which don’t take off until exported across the Atlantic. Jets, radar, atomic energy and computers typify the gulf between UK invention and US innovation. Managed business space is a rare exception. The US is dotted with ‘executive suites’ but the concept is much more limited than here. ‘You have a more organised and complete system,’ says Bill Grodnik, chief executive of Utah-based Da Vinci. ‘We have not done such a good job.’ Regus exploited this to become a dominant force in the US, while other UK names have also established a foothold. So it is ironic that Grodnik has found an under-exploited niche to export back to the UK.
‘Virtual’ offices offer a phone number, an address and a menu of services in place of physical space. The idea is not new: serviced offices evolved in the UK from an amorphous network of accommodation addresses, PO boxes and telephone answering services. UK operator Richard Nissen formalised this into a major London centre more than 15 years ago and now handles more than 500 ‘virtual’ tenants. Grodnik heard Nissen at a conference and picked his brains about introducing the idea to the US.
Three years later, Da Vinci has reached a $6m annual turnover involving 45 ‘virtual’ addresses and is exporting the service to create 100 more across western Europe and 50 in the UK. His timing could not have been better. Redundant professionals setting up in spare bedrooms are desperate for the legitimacy of a business address and phone number. Even those with jobs are being encouraged to work from home.
Regus already services 180,000 home-based clients and expects this figure to soar. ‘It is a permanent change as companies are forced to get more productivity out of their workspace,” said chief executive Mark Dixon when announcing the group’s annual accounts. Other UK managers are realising they should be more involved in a business estimated to generate £10m a year in fees. Leading names have commissioned Simon Jones at agent Officebroker to create their own virtual network.
This trend has a direct impact on property, as reverting to the sector’s neglected origins can boost returns at a time when rents are falling - and without taking on extra space. These ‘tenants’ rarely set foot in a building. In theory, it could be a threat to landlords, as Da Vinci operates from call centres. The benefits come where people want to sit at a desk for a few hours or set up meetings. This requires partners with ‘real’ space. Grodnik’s contribution is via an interactive web booking system for meeting rooms at business centres.
Avanta started providing this link in the UK late last year. ‘We already had a thriving phone-based clientele, such as tenants who had moved and needed call-forwarding, but there seemed to be scope for much more,’ said chief executive David Alberto. ‘We came across Da Vinci and realised it would be better to use them rather than do it ourselves. They were converting 50% of inquires into hard business compared to our one in seven.’
Grodnik aims to go beyond answering phones by exploiting huge advances in technology since Nissen pioneered his service. Digital voicemail, electronic fax, email, voicemail to email, fax to email and voice recognition are just a few of the potential services.
The human touch is still vital, however. Current services often rely on business centre receptionists answering calls but this can lead to delay and confusion if they are busy. The ‘Da Vinci code’ involves highly trained staff with intimate knowledge of each client.They become virtual PAs who can organise diaries, make calls and take decisions. Clients not only save rent but also cut out a receptionist salary that can run to well over £20,000 a year.
Grodnik’s ambitions do not stop there as he forecasts virtual sales and marketing operations supplanting permanent offices. Like Dixon, he expects growing interest from major companies. One has already been in touch about setting up 100 virtual locations as it seeks to cut permanent office space.
TYPICAL COSTS [per month]
[Source: Da Vinci - USA]
Conventional Office $6280*
Executive Suite $1150
Virtual Office $244
*Conventional offices require hefty up-front spending on furniture and deposits, as well and ongoing costs of rent and salaries.
Richard Nissen could be seen as the father of virtual offices. The chief executive of Virtual Office Group had already been involved in serviced offices for more than a decade before setting up a messaging centre on London’s Piccadilly in 1992, long before the idea was a twinkle in the eye of today’s market leaders. Persistent demand for integrated messaging and occasional meeting rooms from rootless professionals - and constant tweaking to improve services - has kept the business buoyant through several slumps. He now has more than 1,200 clients across four buildings, connections with other UK business centres and worldwide links through the Global Office Network.