Penny Parks passed out $1 million in bonuses to her technology consultants in 2000. By last year, those had shrunk to a mere $150,000.
Client gifts and lush corporate parties disappeared, as well as $200 fresh flower arrangements. Most importantly, she moved her seven top managers back to working directly with customers.
Parks closed her Raleigh branch in April and is now considering subleasing some of Parks & Co.’s 14,000 square feet of office space in One Wachovia Center.
“These times make your company much stronger,” says Parks, who founded the technology’ and business consulting firm in 1995. “It’s just not a lot of fun.”
Across the region, technology’ companies have moved beyond the downsizing cliches — selling off Porsches and dumping gourmet coffees — into cost-cutting measures of the real business world.
Gone are the expensive chairs, outlandish salaries, and expensive office space. For Parks, the changes are working. She’s shrunk overhead costs to 28%, down from 36%. After suffering a first quarter 2001 loss, the company’ roared back this quarter, bringing in a net profit of 13%. “Our metrics are back on track, “ she says.
Large companies, such as Titan Technology’ Partners and Personnel Group of America Inc., are moving into smaller offices this spring and reducing employee rolls and furniture needs. Titan went from nearly 300 workers across the country to about 100 and will move into a consolidated 10,000-square-foot space in the Coliseum area that replaces 80,000 square feet across the country’.
Gary Chesson, a partner at Charlotte-based real estate brokerage firm Trinity’ Partners, sees the constant downsizing of tech companies as the other side of the high-growth curve. “Before they’ needed space for growth,” he says. “Now they’ need flexibility for downsizing. “
Jubal Early, vice president of corporate services at commercial real estate firm Lincoln Harris, says the technology’ downturn has hit Charlotte’s office market insignificant, but not catastrophic, ways. “It slowed some of our growth but it’s not going to have a long-term effect,” he says.
He says Charlotte’s diversified economy never relied on its technology sector as the single economic driver, so the city has come off better than other markets where technology’ is more of a focus.
Yet some brokers felt the sting of the slowing economy after the Sept. 11 attacks. As the recession deepened, some brokers missed the second half bonuses coming to them on space they had already leased. The positive side? Early sees a thriving sublease market around town.
Real estate analyst Frank Warren of Frank Warren & Associates says the demands from technology’ firms grew’ too quickly and too soon. Now, with a glut of sublease space on the office market, Warren sees a trend toward throwing some residential space into what had been planned as strictly office projects.
A growth spurt
While shedding assets can be effective, it isn’t always easy’.
Late last year, Vialogix founder Rob Norris moved his crew’ into larger office space next door to his former uptown location, doubling to 6,600 square feet. And w’ith the move, he bought new’ office furniture. The problem came in passing off the old desks. “There seems to be a glut of cubes in the market,”
Norris said. “I’m just about to have the Salvation Army come to get them.” A few’ weeks later, he did just that.
Dave Graves, general manager for Office Environments in Charlotte, says the furniture follows the same depreciation curve as automobiles.
Office Environments business development director Tripp Guin put it this way’: “Companies who have it would rather put it in the road and let a truck run over it.”
When it comes to computers and networks, companies with leases fare better than those that purchased equipment, says Lori Antoniak, who leads the Metrolina Entrepreneurial Council. Without a lease, “you’re stuck with stuff and you’re trying to have a yard sale.”
Yet Antoniak sees coping with a downturn as a realistic part of doing business. “It can be very’ painful,” she says. “But if it saves the company, it’s a necessary pain.” In these trying times, one company’s excess can quickly turn into another’s secret for success. Impact Solutions Inc. Chief Executive Page Tucker has assembled an office full of furniture from sales
at local downsizing companies and through deals on eBay’ Inc. “It’s unbelievable,” say’s Tucker, who
wants to expand the 32-employee Web-based software company to 50 by’ year end.
Down to real stuff
Other companies, too, are picking up bargains in the tech scrap heap.
ettain group Inc., a South End firm, now has more leverage to renegotiate its office lease and deals with hardware vendors, says public relations manager Matt Kinney.
Last fall, ettain moved into a larger office space in the South End for less rent. The reason? When tech start-up MercuryNet closed, space and the furniture became available. “The carpets are cool,” Kinney says of the geometric pattern.
“It still feels new.”
Tire technology survivors have the benefit of philosophy about the bubble and the bust. “I look at it as a correction,” Kinney’ says. “That wasn’t really reality’.”
Adds Norris of Vialogix: “Now it’s down to the real stuff, down to the real technology’.”
MECA Properties Inc. President Tony Pressley takes an even longer view of the technology’s downturn, chalking it up to the laws of supply and demand. Pressley leased a 50,000-square-foot space to iXL Inc. as the Atlanta-based company grew to a force in Charlotte in the late 1990s. Pressley’ still calls them a client in good standing, even though the company wound down its Charlotte location last spring.