Used Office Furniture
Where we are today, and a primer on the overall market

by
John Schwartz, President / SAM CLAR OFFICE FURNITURE

Background: The past 28 months has seen two waves of used furniture sweep over the Bay Area. The first wave began in late 2000 and early 2001, and was the direct result of the dot-com crash.  Huge quantities of ‘like-new’ inventories were available, (some of the best inventories had never been occupied), and products tended to be higher-end, and ‘techier’ in style (lots of vivid color cubicles, and Herman Miller Aeron chairs). Wave #1 dried up around the middle of 2002, and we were then immediately hit by Wave #2, which was a result of the overall contraction in the local economy. This wave has been characterized by more main-stream products (the weird and wild stuff is mostly gone), and products that are older, and showing more wear-and-tear.

Where we are now: As we move through the middle of 2003, now 2.5 years after the ‘crash’, we are well on our way back towards a more ‘traditional’ state of the used market.  As Wave #2 ends, we are still able to find good inventories available. However they are no longer ‘like-new’, and the quality inventories are becoming scarcer and harder to find. It is possible we will see a third Wave. This might occur if we see the larger corporations who are currently trying to sublease their furnished space capitulate, and move to recoup some costs by liquidating their unneeded furniture assets. Major corporations are also consolidating their office facilities when their lease term ends.  We are starting to see this in isolated instances, and the products coming onto the market tend to be similar to Wave #1.

Where the best deals are: The best deal in used furniture today still resides in the ‘plug-and-play’ office. It is difficult to calculate how many square feet of ‘plug-and-play’ space is currently available, but within that space lays millions of dollars worth of depreciating furniture, festering on someone’s balance sheet.

When space is available with furniture manufactured in 1999 or later, and the configuration of the furniture fits your needs, in general, you cannot buy that product any better. Here is why:

1.    The landlord has very little cost associated with the furniture, usually taking it in trade from a former tenant,  OR

2.    The party you are subleasing from is desperate to get some offset against the monthly expense they are incurring, and therefore will lease the space with the furniture included (no or little additional cost).

3.    The product is already in the space, so you avoid having any delivery or installation costs (which can run up to 13% of the total cost of furniture).

4.    The furniture costs will be incorporated into the lease, so you avoid large capital expenditures associated with buying furniture separately.

If plug-and-play space doesn’t work for you, then the following information will arm you with the basic knowledge required to safely ride the wave -

Primer on the used furniture market:  Unlike buying new furniture, where distribution channels and options are more structured, there are a multitude of different sales channels and product classifications that characterize the used market.  The basics are outlined below:

Sales Channels:

• Furniture Dealers:  Furniture dealers tend to be established businesses with offices, warehouses, and showroom facilities. They generally offer new and used office furniture, and should be able to show you a variety of products at different price points and quality levels. They should be able to provide you with CADD generated space plans, which will show precisely how the products you are buying fits into your space. In addition, they should have designers available to confirm that the space they are designing meets all federal and local building requirements.
  
  
• Used Furniture Brokers:  A Broker generally offers a ‘no-frills’ approach to the market. Used furniture brokers tend to be one or two person operations, which move from ‘deal to deal’, usually working in a geographic region. Brokers usually do not have a ‘formal’ office, and usually do not have facilities to show product. They generally don’t offer design services (although some do). Because buying and selling used furniture is all they do, brokers often have greater access to used inventories, and may sell at a lower price compared to a dealer. In many cases Brokers will sell inventories to dealers, who then re-sell them to the general public.  
  As in any business, there are good dealers and brokers, and there are the dealers and brokers you want to avoid.  Some points to note:

1.     Do your homework – if you have never heard of the dealer or broker, ask for, and check references. Horror stories abound about clients who paid in-full for an inventory that was missing key parts, pieces, or other components, and therefore could not be properly assembled.

2.     It is not unreasonable to view the product before you purchase it – if the product is ‘in-storage’, ask that a sample be set-up for you to view. This way you can confirm it meets your needs.

3.     Unless you know who you are buying from, don’t ever buy anything sight-unseen, or off an e-mail or website. A credible dealer and broker can arrange for you to see what you are buying, before you put any money down.

The final sales channel to discuss is the growing in popularity Auction:

• Auctions:  Auctions are generally used to maximize the value of the products being sold for the benefit of the seller. Auctions are used to move large quantities of product, however, the prices that these products are sold for are often higher than if one was to purchase the same products through a furniture dealer or broker. In addition, all sales are final, so if the product doesn’t fit or work as you had intended, there is absolutely no recourse when purchased at auction.

Product Categories:  Used furniture is a general catch-all phrase for furniture that has been previously owned. Before buying used furniture, it is important to understand what the seller is offering you. The main categories of used furniture are As-Is, Refurbished, and Remanufactured.

• As-Is refers to furniture that is re-sold in the same condition as it was purchased from the original seller. No improvements or very minor improvements have been made to the furniture. As-Is furniture is the least expensive option.
  
  
• Refurbished furniture has been aesthetically improved by the re-seller from its original purchase condition. Refurbished furniture offers a mid-price range for used furniture, and moves closer in price to equivalent new furniture costs.
  
  
• Remanufactured furniture has been re-built by the seller from its original condition. Component parts may have been replaced or rebuilt. Remanufactured furniture is the most expensive used furniture option, and can be equal in price to equivalent new furniture.

Frequently Asked Questions About Buying Used:

Q: Will I be able to buy the size and configuration I need?

Because used furniture has been re-purchased from a previous customer, it is available in the size or configurations they needed. This may or not represent what you need. As a result, there could be hidden costs in trying to make their parts and pieces fit your specifications. Before buying any inventory, confirm with the seller their ability to re-configure the product as required, and work out a price for any change-orders or add-ons. This is especially critical when purchasing used workstations, where the seller may not have access to purchasing new parts and pieces.

Q: What is the warranty on used furniture and who stands behind it? 

When it sounds too good to be true, it usually is. The stories of people buying name brands like Herman Miller and Steelcase at 90%-off list prices are very misleading. Remember that even when a name-brand product is offered as "Completely Re-Manufactured," it is still considered used furniture, and with used furniture, factory warranties don't apply. For example, while the used furniture you are purchasing may have originally had a life-time warranty from Herman Miller, it is now backed only by the person or firm from whom you purchased it from.

Q: Will the electrical system be safe and will it solve my needs?

If the seller is presenting the product as re-manufactured, confirm that all electrical products are U.L. listed and of current technology. This is especially true now, with all the recent changes made to electrical and data components.

Used furniture in many cases will contain used electrical components. You'll want to make sure there has not been too much wear and tear, that the wiring has never been overloaded, and that the ground wiring and insulation are still intact. It is always advisable to have your IT person review the electrical / data capacity of a proposed furniture system, to insure it is compatible with your needs.

Final Words:  The bargains and abundance that characterized the used furniture market in late 2000 and early 2001 are a thing of the past. Quality used furniture is still available, but it is harder to find, and with the recent wave of imported products, the price gap between existing used furniture and new budget furniture is closing quickly.  In my experience, you are a prime candidate for purchasing used furniture if you have the following profile:

• Office employs 20 employees or less
• Buyer expects to use the product for a maximum of 2 to 3 years
• Companies for whom price is the primary concern
• Product warranty is not a concern
• Matching current furniture with future furniture is not required
• A uniform and consistent look is not a factor

Purchasing furniture (especially modular workstations) can be relatively complicated. If you are not an ‘expert’, then do your homework in picking a furniture dealer or broker. Take the time to reference, and make sure you are dealing with someone you can trust. Remember… the old rule still applies -- if it looks to good to be true, it probably is…

John Schwartz
President
SAM CLAR OFFICE FURNITURE
(800) SAM-CLAR (726-2527)
john@samclar.com
www.samclar.com 

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