March 13, 2006

For those who are tired of sleeping where they work American Executive Centers adds office services

By Adam Stone
Special to the Business Journal

KING OF PRUSSIA -- Anthony Caruso needs more than an office. He needs office help, but he doesn't need much of it and he only needs it once in a while.

As president of CSA Group, he leases a furnished office in Marlton, N.J., complete with occasional personnel to help with billing, phone answering and general office duties. Yet it all costs less than if he hired these people himself. Billing services alone used to cost him $7,000 a month; now he pays just $2,000.

"You have this whole staff of people and yet you only pay them for the exact time that you need them," said Caruso, whose firm provides logistics consulting for the apparel industry.

All this service comes to him by way of American Executive Centers, which since 1981 has leased executive suites throughout the area. A recent push on the service side has helped drive revenue from $4.5 million in 2003 to $6 million last year.

"It's more than just an answering machine," said Mike Dugan, president of American Executive, which these days offers bookkeeping support, IT help and administrative assistance, among other functions. Dugan says he bills about $60,000 a month for these services.

The company maintains long-term leases on some 500 offices in a number of high-profile locations, including Radnor Financial Center, Two Bala Plaza, Maschellmac Office Center and Two Penn Center. Rents typically run from $900 to $1,100, though they can go higher for the largest spaces, Dugan said.

That puts Dugan right in the middle of the pack, according to the Executive Suite Association. The trade group said ready-made office space can cost anywhere from $500 to $2,500 a month. The association estimates there are about 4,000 such facilities nationwide.

The typical suite comes fully furnished, from desks to file cabinets to bookcases. Once these offices served as homes away from home for regional sales staff and other employees of out-of-state corporations. These days, Dugan said, he is just as likely to draw his clientele from among self-starters who have gotten tired of working at home.

"This gives them a better image, it gives them credibility and it gives them the ability to grow somewhere other than upstairs into the next bedroom," he said.

Some competition comes from Regus Group, a worldwide executive suite enterprise based in Brussels, Belgium. But mostly Dugan feels the pressure from the world of traditional real estate, whose value proposition is better known.

Yet some in the real estate field say American Executive is well situated to compete, especially with its ability to deliver smaller spaces with a full range of amenities.

"They fill a void," said Jim Eaton, who as senior vice president at Wayne-based NAI Geis Realty Group has helped locate properties on Dugan's behalf. "Once you get down below 1,000 square feet or so, it is hard for the typical office building to create space for small users. Even if you find a small space just for one office, normally that small a space doesn't give you all the services."

Dugan has taken some pioneering measures to capitalize on his position in the field. Most notably he put up a company Web site 10 years ago, long before others in the industry had made that move.

Frankly, he didn't think it was a good idea at the time. "I felt this was not a product you could sell on the Web, that this was really a word-of-mouth product," he said. But some of his staff pressed the issue, "and I have a lot of respect for the people here. When they feel strongly about something I tend to let them do it."

Today half his initial contacts come from the Internet.

Also helping to fuel the company's growth has been a steady stream of physical expansions. Over the past four years Dugan has opened new centers in Exton and Radnor, and has taken on new leases within the company's existing locations.

But it is the service offerings that have made the biggest difference, setting this company apart in a field of competitors where such services are largely unheard of.

Dugan said the decision to pursue the service angle is typical of an overarching business philosophy that guides his efforts.

He points out that instituting services has been a laborious process. For example, a newly created Web portal lets clients book conference rooms, leave instructions for how calls should be handled and coordinate diverse other service functions -- but it takes a lot of back-end work to make those pieces come together.

The point?

"There is a tendency in business to do the easy things," he said. "But it is doing the hard things that really allows you to put some distance between you and your competitors."