Coworking spaces are surging in popularity as they provide a flexible workplace solution that many remote workers and small startups are yearning for. Coworking spaces provide shared office space and facilities. Typically, this is a cheap alternative to renting an office space and dealing with the obligations that come with it. This article explores how you can rent a coworking space and the coworking licence agreement you should have in place.

How is a Coworking Agreement Different from a Traditional Lease?

Traditionally, most businesses that wanted premises to work from­ would need to lease out office space. A lease gives the tenant an exclusive right to possess the premises. For many businesses, this is important, as it means they:

  • have exclusive control over their workspace;
  • have privacy in their workspace; and
  • can give their workspace the look and feel they want.

One great advantage of a lease, for both business owners and landlords, is its fixed term. For business owners, this means they can negotiate a long lease. If you are in a prime location and have built up a good relationship with your customers, certainty around the longevity of your businesses location will help you relax and plan long term. For landlords, the promise of a fixed income for a set period of time is attractive, especially if they can find a good tenant that does not fall behind on rent.

Coworking spaces, on the other hand, differ because the business looking to use the space is not granted exclusive possession. It is a shared space where businesses need to be willing to ‘cowork’ with other individuals and businesses. The length of the agreement in this situation is less significant as members want an agile and flexible arrangement that can easily change as their business needs change. For this reason, a licence instead of a lease is granted to members of a coworking space. A licence is an agreement which grants members only part of the premises to use or only provides temporary or intermittent use of the property.

Why Should I Consider Renting a Coworking Space?

There are many different types of coworking spaces, offering members different styles of work, including:

  • hot-desking;
  • shared executive spaces; and
  • temporary, exclusively-used office spaces.

These cater for members who:

  • are working remotely;
  • have a small team that needs flexibility; and
  • are startups looking for collaborative workplaces.

Coworking spaces provide a budget option, allow professionals from across industries to mingle and typically don’t require the type of commitment that a lease does. For a growing startup that doesn’t know what their needs will be the following year and wants to network with other businesses and keep costs down, a coworking space may be ideal.

What is a Coworking Space Licence Agreement?

A coworking space licence agreement is an agreement between you and the owner of the coworking space. It allows you to use the space for a particular purpose.

This agreement will set out the terms you agree to rent the space under. It is important that the terms are clear and you understand the relationship. A commercial leasing lawyer will be able to help you understand the licence and your rights. There are a number of key clauses in the agreement, including:

  • fees;
  • permitted use;
  • termination; and
  • coworking space rules.

Fees

Coworking spaces often have different membership structures. The agreement should clearly set out what your fees are and what this entitles you to.

The agreement should also establish when payment is due and how it should be paid. You should be aware of any consequences if you are late to make payment.

Permitted Use

Secondly, you should check what the permitted use is and make sure that is in line with your business plan so that you are not restricted.

Termination

Additionally, you should be aware of how you can terminate the agreement, and what will be considered a termination event.

For example, if you fail to pay your licence fee within a set number of business days, the owner of the space may be able to terminate the agreement. If you wish to end the agreement, you are usually required to give notice, as set out in the agreement.  

Coworking Space Rules

Most coworking spaces will have internal policies and procedures that you will need to agree to. These typically relate to acceptable conduct and cover issues such as:

  • noise levels;
  • harassment;
  • use of the kitchen; and
  • alcohol and drug policies.

Coworking Space Checklist

  • Is there a lease in place between the landlord and the coworking space that is licensing the space to you?
  • Have you been provided with a coworking space licence agreement?
  • Is this a casual arrangement or a fixed term agreement?
  • What are the hours of access?
  • What shared services are included and do these incur extra fees? For example:
    • internet;
    • meeting rooms; and
    • recreational areas.
  • Can you lock an area off or lock your possessions somewhere overnight?
  • Is there a separate set of rules that your coworking space licence agreement refers to? Have you read these rules and does your business model comply?
  • Do you have insurance? Typically, the owner won’t provide insurance for you. Therefore, if your laptop goes missing, you will need to cover the cost.

Key Takeaways

Coworking spaces provide a workspace solution for those who don’t require exclusive possession of an entire office space. They are suited to:

  • startups;
  • remote workers;
  • those that want to work in a hub alongside other professionals; and
  • businesses that like flexibility.

Once you have found the perfect coworking space to move into, it is important to do your due diligence  and understand the arrangement. You should be provided with a coworking space licence agreement and rules. If you have any questions about renting a coworking space or your coworking space licence agreement, get in touch with LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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