WILLIAM Willems operates his office—all 950 of them in 400 cities—with a thin gilded plastic sheet the size of a credit card.

“This is what I call an upgraded Starbucks principle,” Willems told the BusinessMirror, flashing the 3-inch by 2-inch card embossed with his name.

That card is one of two products that separate Regus Group of Companies from its competitors, claims Willems, general manager for Southeast Asia of the world’s largest operator of “flexible office space.”

It is also one of several strategies that have helped steel the Dallas, Texas-based company’s businesses from an unwieldy economic slowdown in the United States.

“If you want to work in a professional surrounding where you don’t have people shouting…about their last trip for the weekend,” this is your ticket, Willems said.

The card, which comes in gold and platinum versions, is given free to customers and allows them access to all business centers operated by Regus in 70 countries.

It is a differentiation in an industry that has seen the entry of new players—two competitors launched their Philippine operations during the first quarter of this year.

Willems admitted that competition in the industry where Regus belongs has been increasing as companies worldwide rein changes in the work force while maintaining market share in a very volatile arena.

In these “tough times,” Willems says, the business of outsourcing office space has become attractive because companies “try to minimize cash investments and capex and avoid long-term commitment with heavy fixed cost.”

Hence, companies like Regus and its competitors like CEO Suite, Instant Office and MyOffice, among others, give businesses, especially those starting up or have less than a dozen employees, the option of shedding costs on office space.

“You don’t need to invest; everything is there. You come here, sit and work. You don’t need to buy furniture, IT infrastructure, or telephone. We don’t oblige people to come in for long-term commitment costs,” Willems said.

“I think we’re recession-proof.”

Resilience

WILLEMS, who has been working from Hong Kong for the past eight years, claims the downward spiral of the US economy hasn’t hit the region. Yet.

“For the moment, I can tell you sales have not been dropping and the number of sales hasn’t been affected” by the dropping US property sector, he said.

But investments have already been affected, according to new Global Capital Flows Report from property consultant Jones Lang LaSalle.

In a statement released a week before Willems arrived in the Philippines, Jones Lang LaSalle said that it “expects global investment-market volumes for 2008 to be down over 30 percent on 2007.”

“The Americas and European investment markets will certainly see a material decline in full-year volumes and, although Asia may be more resilient, volumes will not achieve the heights of 2007.”

Jones Lang LaSalle quoted executive Tony Horrell as saying that property-investments-volume decline “is being exacerbated by unease about the global economy, in particular about major economies such as the US, the UK and Japan.”

But this hasn’t deterred Regus subsidiary Regus Centres Inc. from opening its third Philippine business center in Taguig City, barely two weeks after launching another center in Kuala Lumpur.

Willems said the company plans to open another center in the Malaysian capital next month and two more in the Philippines this year.

He added that Regus’s P35.7-million investment for its third Philippine center brings to 5,500 square meters and 600 seats the total flexible space and seats for sub-lease the company manages in the country.

The Taguig City Regus center’s 1,134-sq-m facility houses 49 fully furnished offices and 176 seats.

Willems added that this month Regus would also transfer their call-center operations from their center in Makati City to an expanded version in their Taguig City center.

“We’re talking about up to 1,200 people,” Willems said. These agents, he explained, would handle the customer- service segment of Regus for the Asia-Pacific region.

However, Regus’s investment in the Philippines appears as an exception, based on Jones Lang LaSalle’s analysis.

The property consultant noted that while all major “markets in the region registered increases” in direct commercial real-estate investment, the Philippines and Thailand were excluded.

Jones Lang LaSalle cited “crossborder volumes were constrained by rigid foreign-ownership legislation and a lack of investment-grade assets offered for sale” in both countries.

For Willems, the reasons include a high corporate tax and wanting transportation modes, especially in the Fort Bonifacio area where their third center is located.

Nonetheless, he said with a government pushing for international investments and “landlords who understand what needs to be done to welcome companies,” the Philippines still has that elbow room.

Spacing

BASED on Jones Lang LaSalle’s analysis, the Philippine property industry remains ensconced in Asia’s resilient shell.

“Overall, the real estate picture for Asia looks positive and global capital allocations continue to re-weigh in Asia’s favor,” Stuart Crow, head of Asia Capital Markets at Jones Lang LaSalle, said.

“We are likely to expect a rebound in investor confidence and transaction volumes to increase in the second half of 2008.”

Willems agrees. “If and when the recession hits, Asia would be, to a certain extent, less affected than the rest of the world because all the large companies we’ve been talking to see the growth potential that exists in [this region].”

Asia’s growth potential was cited by the World Bank when it noted that East Asia and Pacific’s contribution to the world output increased by 5 percent in 2006 from just 9 percent in 1995.

That year Regus Centres’ net income grew by 335 percent to P25.6 million from just P5.88 million in 2005, its latest financial statement submitted to the Securities and Exchange Commission shows.

“These companies need to preserve investment and they know where money or profit can be made: it’s most probably in Asia,” Willems said.

Regus’s operations in the region contributed 9.2 percent to the firm’s revenue last year, according to him.

In Southeast Asia, Willems oversees 18 Regus centers in Singapore, Malaysia, Vietnam, Thailand and the Philippines. The company has a hundred centers in the Asia-Pacific region.

Willems added that even if the Philippine economy specifically slowed down to 4 percent, “that’s still a lot.”

“The growth potential will be much bigger this year for Regus and, I assume, for a lot of companies,” he said.

This is despite the spikes in rental prices in the region. “There are definitely some markets where prices are going to the roof, like Singapore. To certain markets, it’s potentially justified; there’s a need for some adjustments,” he said.

The Philippines need not worry since, according to Willems, it’s still “cheaper” here even if rents shot up in the Makati commercial and business district.

“I think that’s why we decided to expand here because basically your cost of life is very low compared with most Asian countries around. Your cost of labor is low and qualification is high: it’s really easy to find good qualified people [here].”

Willems added that “even if [the times] gets tough, I think it’s because of the recession that people would be keen to come to us.”

To cite an example, he pointed out that Regus’s third business center posted a 40-percent occupancy rate since it began operating four months ago.

Positions

THE challenges for companies like Regus, according to Willems, include the location and the staff operating these centers.

For Regus, location is very important because Willems said they choose buildings near landmarks at the heart of urban centers. “It’s one of our challenges to find the right building at the right price,” he said.

To address this, he said the company appointed a property director for Asia “to develop our network.”

It also formed a new center opening team that searches for locations and organizes the resources needed to open the center once it is greenlighted.

“Our business is not a traditional sublease. We are renting space where we give access to a lot of services and common areas which are included in the price.”

But the key word here, he says, is flexibility.

“That means you can rent an office for one day or for five days, for one month or for three years. You can start with us by taking one office and when you’re huge enough, you go into a conventional office space.”

Regus service rates start at $231 (P9,700) a month for “privacy, air-conditioning, maintenance, access to the lounge.”

“You don’t need to pay for cleaning, electricity and reception service,” he added.

This core business—provider of flexible workspace—addresses the phenomenon of a “mobile” work force whom Willems said is composed of people ironically leaning more toward working at home but don’t want official mail arriving on their doorsteps.

Ironically, too, this “mobile” work force prefers reduced travel time.

Regus’s target market also prefers to have a professional image. These are companies run by just a single person “who works from home and doesn’t want mail coming home.”

“They need professional image and a good address; so we provide these things and more to them,” Willems said, emphasizing the need for a good location for Regus.

Finding the right people is the second major challenge for businesses like Regus. “It’s not that easy because we’re in a service industry. And in Asia, especially in certain markets but not so much yours, there’s a serious competition on keeping the right people,” he said.

To address this, Regus established an in-house training team as well as a recruitment team.

“There’s a lot of extra room [in the market] for [the] flexible office space [business]. Finding the right people will provide potentially an opportunity for us to provide such space,” he said. “All of these make me think that we are in the beginning of a big step.”

The first step, he said, is getting the gilded plastic sheet.

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