When Cloud Cruiser Inc. wanted to ditch its cubicles and get all new “open seating” for its Roseville offices, it didn’t want to spend the money on high-end workstations. But it still wanted top-of-the-line furnishings.
So it turned to Hap Phillips, owner of one of a half-dozen or so Sacramento-area businesses that specialize in used office furniture. Over a recent weekend, Phillips and his crew disassembled eight existing cubicles and re-created 21 new workstations. The only new pieces were the tabletops.
“As a startup, we’ve tried to keep costs down,” said Greg Howard, a co-founder of Cloud Cruiser, which tracks in-house and cloud computer usage for large corporate clients. He said the entire weekend job, including installation of wiring and cables, cost about $8,500. “We probably paid half of what we would’ve paid new. It was amazing.”
There’s value in recycling older, U.S.-made furniture, dealers say. “It’s built to last. That’s not what they make in China,” said Phillips, who operates from two West Sacramento warehouses stuffed with high-end office castoffs.
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As with any “gently used” merchandise, the price breaks on buying used office furniture can stack up. A single Aeron chair by Herman Miller lists new for $1,000 to $1,200. Used, it’s typically less than $500. Same with sleek Teknion cubicles that can be bought for roughly half their first-time price tag, dealers say.
The interest in used furnishings comes as the office new-furniture industry is seeing a resurgence in sales, which plummeted during the recession. “We fell off a pretty big cliff in 2008-09, but we’ve been steadily climbing out over the last six years,” said Tom Reardon, executive director of the Business and Institutional Furniture Manufacturers Association, based in Grand Rapids, Mich.
While his group is focused on new office furnishings, Reardon sees the need for recycling used cubicles, desks, chairs and other office pieces. “There’s definitely a market for it. It doesn’t make sense after 10 to 15 years to take it all to a landfill or destroy it.”
Resellers like Phillips say much of the high-end used inventory comes from Bay Area banks, law firms and high-tech offices that are downsizing or moving offices or periodically upgrading their office decor. According to Phillips, there’s constant turnover from big tech and professional firms that often have five-year write-off cycles for furnishings. Also, local firms, like banks, credit unions and hospitals, need to upgrade when their lobby furniture becomes outdated or worn from constant use.
At Ruland’s Used Office Furnishings on 16th Street, “my phone rings all the time,” whenever a company moves, changes or downsizes into smaller cubicles, said owner Steve Ruland, who’s been selling used desks, chairs, bookcases and file cabinets since 1984.
On a recent afternoon, small-business owner Timothy P. Devine, a retired U.S. Air Force lieutenant colonel, was walking the aisles at Ruland’s. He was looking for a used conference table to match the furniture – also used – that he’d bought last year from another Sacramento dealer.
“It’s all about saving a dollar but still looking professional,” said Devine, who said the cherry-wood furnishings he first bought look like “the kind of furniture you’d sit at if you were getting a bank loan.”
Devine said he’s already invested $25,000 in his new company, Aviate Enterprises Inc., which procures electrical, plumbing and office materials for local, state and federal government contractors. But fancy furniture is low on his list of expenditures.
For his new office, which opened in November at McClellan Field, Devine said he purchased two desks and chairs, two credenzas, several bookcases, a coffee stand and a round meeting table with four chairs – for a total of about $3,400.
The availability of – and demand for – used furniture fluctuates with the economy. During the dot-com bust in early 2000, the market “was flooded with all this high-end product, furniture that was barely used,” said Phillips. He said clients like e-Motors on San Francisco’s Market Street lost their venture capital funding and closed their doors almost overnight; thousands of dollars of barely used furniture went to brokers and dealers.
The recent recession crimped demand for office furniture – both new and used. Few new companies started up and existing companies were reluctant to spend, Phillips said. He recently downsized and consolidated his inventory into two West Sacramento warehouses, for a combined 15,000 square feet. He now specializes in high-end cubicles and sells mostly from Craigslist ads or contacts from his Sacramento Office Furniture website.
Similarly, Ruland said he’s been hanging on since the recession hit, having downsized his sales, repair and delivery staff from 13 to five employees.
Office chairs are one of his mainstays. Rows and rows of chairs in a rainbow of colors and styles – about 2,500 in total – occupy part of his 26,000-square-foot warehouse. “We get chairs in droves,” Ruland said. “They’re like used shoes. They show wear if they’re used everyday.”
Ruland steam-cleans them and does minor repairs.
Phillips, who has an inventory of 700 or more chairs – some priced as low as $30 – often reupholsters the more-expensive office chairs in a neutral black weave, which he buys by the bolt. The trendy, colorful fabrics often picked out by office interior designers just don’t work well in resale, he said.
Probably the hardest stuff to unload: the heavy oak or faux-wood desks and filing cabinets from the 1980s. “The market is flooded with it,” said Gene Gualco, vice president of California Office Furniture, which mostly sells new, but often is asked to pick up old furnishings from clients.
For energetic startups likes Cloud Cruiser, buying used office furniture makes sense, especially in a tech environment. “Our employees are not as caught up on the status of having a big office and a big chair. It’s more about the work and the office atmosphere,” said Howard, whose Roseville-founded company expanded and moved its headquarters to Silicon Valley last year. “We’d rather spend the money on salaries and save money everywhere else.”
Note to readers
In last Sunday’s personal finance column, we wrote about IRS requirements for taking mandatory withdrawals from IRAs and other retirement accounts. Many readers noted an error about those required minimum distributions, known as RMDs, that we wanted to clarify. Here it is:
Starting at age 70 1/2, you must take mandatory RMDs from your IRA and retirement accounts. But there’s an exception if you’re still working. If you’re still employed at age 70 1/2, you are not required to take an annual RMD from your current employer’s 401(k) or 403(b) account. But, you must still take RMDs from your traditional IRA accounts, including 401(k)s that were rolled over.
For details on how to calculate your RMDs, go to: irs.gov.