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Traditional office vs. co-working space: Which is right for your business?

Collaborative work environments with shared spaces are an increasingly popular take on traditional office space, but can come with less than ideal leasing terms.

Most co-working spaces operate using an occupation license agreement that allows members to use the space for a particular purpose or set of purposes. But it is much easier for a landlord to revoke a licensee’s right of access to than it is to evict a tenant.

A commercial leasing agreement for traditional office space provides tenants more rights and a greater level of security. Such leases can be overly restrictive for startup operations planning to grow quickly, however. Those with smaller teams and budgetary constraints may benefit from the collaborative environment and reduced costs a shared space can provide.

If you’re considering a license agreement for shared space, consider the following:

  • Is there an indemnity clause in the event of theft or lost property, or will you need your own insurance to cover these items?
  • Are there restrictions on web usage, printing facilities, use of common areas and hours of access?
  • What are the membership fees and what amenities do they provide access to?

For those considering a more traditional space and subsequent commercial lease agreement, consider the following:

  • Are you allowed to sublet or license the premises to capitalize on the space if desired?
  • Does rent include any other utilities or services?
  • Will the lease term match the business needs?
  • What are the permitted uses and are there any relevant zoning laws worth noting?
  • Does the lease contain an option to renew? An option to renew is a clause in a lease agreement that gives tenants the option to extend their tenancy for an additional term. Typically, a tenant looking to exercise an option to renew should provide the landlord written notice 3-6 months before the lease expires.
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