With the coworking space industry currently witnessing rapid change, the location you choose for your co-working space will definitely make or break your business. Aside from choosing the perfect location, the building itself will also have to suit your ideas.
Entrepreneurs looking to start a co-working space are advised to consider their tenants’ comfort and preferred working style. Note that an ultra-modern, glass tower may sit well for traditional business types; but an industrial loft-style space may be preferable for techies and creative.
You should also consider the community because urban spaces tend to be denser in population and entail greater demand. Your tenant niche will also influence your choice of business location. If your business objective is to focus on in-and-out jet-setters, then you should find a spot close to the airport.
But if you aim to go down the sports niche, then a location close to major stadiums or training centers would be ideal. The perfect location for your co-working space should have concrete transit, parking, and preferably bike access.
Setting your space close to restaurants, cafes, gyms, banks, and other daily necessities can also enhance the convenient lifestyle factor. If you have already found a good location that suits your business needs, here are the top tips and strategies to help you negotiate an effective lease that protects your interests.
10 Tips and Strategies for Negotiating a Lease for a Coworking Space
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Seek Legal Advice
Trying to land a beneficial commercial lease is a daunting and complex process that involves a lot of negotiation. Therefore, you ought to seek the expertise of a qualified lawyer or accountant. You should request a lawyer or accountant to review the lease to avoid getting yourself into a messy situation.
Leveraging the expertise of a lawyer at the very beginning of the negotiation process will ensure the lease is in line with your business desires.
Know Your Budget and Requirements
You need to first settle on your exact budget, the exact things you should have, and what things would just be relevant to the success of your space. For instance, you can sublease part of your space to a neighborhood Café or restaurant to serve your members’ needs, or you may want adequate and free parking. Note that all these nice-to-haves will be your negotiating chips.
Check The Square Footage Yourself
Have it in mind that space measurements can easily get out of date, especially since every commercial tenant tends to alter the space to suit their needs. Always believe you are renting the usable space, and that square footage may have reduced significantly.
For a co-working space, the exact square footage is very vital because commercial rent is paid by the square foot. You don’t want to be paying for square feet you can’t use, therefore measure the space yourself to avoid funny stories.
Haggle Over The Fixturization Period
Most often, you may even have to renovate or redesign the space to fix it up for your co-working space. This might be as simple as mounting a few things or it may be more intensive. However, you shouldn’t agree to pay for the work and the rent of the space at the same time.
Note that some landlords won’t mind redoing the space for you – as long as you’re paying rent. While some will prefer you redo the space yourself, but offer free rent during the fixturization period.
Consider The Duration
When negotiating a lease for your co-working space, note that the duration is the length of time you will agree to occupy the property. According to experts, it is recommended you take time to analyze how the current commercial lease term reflects your business’ future expansion plans.
If you are still a startup, you should consider a shorter-term lease because it offers your space the flexibility to scale up and expand. However, if you are already an established space that has a large clientele and wants long-term security from the premises, then a long-term lease is a perfect option.
Negotiate For All Available Perks
Just like it was noted above, it may be daunting to haggle with a corporate landlord over certain things like the base rent and lease structure, however, these landlords may be open to offering other perks like free employee parking or Wi-Fi. Note that some of those perks can reduce your ongoing business cost in the long run, so don’t settle.
Check Market Rents
It is also necessary to have a good idea of market rents in the neighborhood you’re considering and match them with the landlord’s asking rent. Also, consider speaking with a commercial realtor to get up-to-date market lease rates.
This information can help you negotiate a lower rent if the asking figure is high. To also negotiate from a place of strength, you should do it in more than one location at the same time. Have it in mind that this will give you the ability to walk away from at least one of the negotiations, putting you in a better position.
Review Termination Conditions
Before you agree to sign the dotted line, endeavor to check the circumstances under which either party may terminate the lease. For instance, can you be evicted for missing a rent payment? What is the agreement if the building is sold?
If your business revenue declines or you want to scale up to a bigger space, how can you break the lease? Have it in mind that leases mandate that you pay all or part of the remainder of the rent. You can negotiate for better terms.
Look At Renewal Conditions
The length of your lease can range from month to month to several years. Regardless of how long, you must understand when and how the lease will be renewed. In addition, ensure that you can renew the lease at the end of the term if that is critical to you.
Also note that you may be able to negotiate other options, like the right of first refusal to lease an adjoining unit for expansion. In the same vein, if the rental market has declined, the landlord might decide to offer you a better deal when you renew.
Try To Avoid Including Your Personal Name
Signing a commercial lease for your co-working space can expose you to significant personal liability. Owing to that, ensure you sign the lease in the name of a separate limited company rather than in your name. Note that by not signing the lease in your name, the company becomes liable for the debts imposed by the lease.
Howbeit, have it in mind that not all landlords will concur to this, especially if the co-working space has little to no financial history. However, leveraging the expertise of an experienced solicitor can help negotiate a compromise and ensure your name is not on the lease.