Less Space Became Path to Growth for “Big Box” Property Management Firm

Fort Lauderdale, Fla. — Among the enduring statistics that the Great Recession has left in its wake, Florida’s foreclosure rate (second highest in the country behind Nevada) is a hard one to shake.

The 18-month recession, which ended in June 2009, hit real estate prices hard across the state, where most cities still await a return to prerecession levels.

Inside the world of commercial real estate, the collapse was especially painful as commercial clients sought to exit nearly consummated deals and rushed to downsize their space. The trend has evolved to where smaller spaces have grown in demand.

In South Florida, where commercial real estate prices remain well below their 2006 peak, businesses are looking to get “a better handle” on the costs behind new hires and employees, and many now view less space as bringing better value, explains Tina Kapp, a senior executive with Midgard Management, a commercial property management firm based in Fort Lauderdale.

“Businesses are now looking for greater flexibility when it comes to their employees,” says Kapp, who notes that the demand for less space quickly increased the call for executive suites or smaller office configurations that often offer commercial tenants additional perks.

“What we found is that people are more willing to pay a little more in rent if they don’t have to deal with issues unrelated to their business,” she explains.

For Kapp, the growth in popularity around executive suites could not have been better timed.

A little more than a year ago, Midgard Management had taken over the lease of a firm that had been managing a space as executive suites, when Midgard was unable to come to terms with the tenant on a renewal. Having traditionally focused on so-called “big box” suppliers of commercial space with rentals ranging upward of 50,000 to 80,000 square feet, Midgard turned to Kapp, a seasoned Midgard executive, to test the waters and lease out the space known as Crown Center Executive Suites.

“We’re at 75 percent occupancy, and as of November 1, we’ve been at it only a year,” explains Kapp, who is today Midgard’s executive director of Crown Center Executive Suites.

“This started just as an experiment, but now it’s a real business for us,” says Kapp, who lists an on-premises health club among the amenities that Midgard’s executive suite clients now enjoy.