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Thinking of sharing your office space?

Thinking of sharing your office space?

| Published on September 25, 2019

Sharing office space might be a good idea when your office has unused space and your potential office-mate is a business operating in a similar market and is not in direct competition with you. Your services might be complementary to one another and you might even cross-refer business to each other.
This could be somebody you already know through your business circles or it could be that you want to start a new branch of your business and do something else aside of your main trade. There could be many other scenarios, of course, and once you decided it would be a great solution to share your office space, this is what you need to think about.

Existing lease

Your existing lease might already have some provisions relating to sharing occupation and most often it would require you to speak to your Landlord first.

Usually your lease would say that:

  • Sharing of occupation is prohibited – If your lease prohibits office sharing, whilst the Landlord would be under no obligation to consider your ideas, it is still worth talking to them and negotiating that the lease is amended to allow you to share your office. In the end of the day it is a commercially sound proposition, right?
  • Sharing is allowed but the Landlord needs to provide consent – In this case the Landlord is most likely to provide their consent and allow you to share office space. However, usually the Landlord would want to know who this new tenant is, what they do and most importantly – can they pay rent. Letting someone new in may expose the Landlord to new risks, hence the consent might come with some conditions.
  • Sharing of occupation is allowed but only within the group companies – This condition is more or less a combination of the two above. It means that if the proposed tenants are the companies within the same group (for example, when you control both companies), then these companies will be allowed to share office space. If they are not – then office sharing might be prohibited. Like we mentioned before, just let your Landlord know and see if there is any room for further negotiation.

Landlord’s consent

Once the Landlord agrees in principle to office sharing, they will provide you with consent in writing, this document is also referred to as licence. The licence will form an additional agreement between you and the Landlord, needless to say – it is an important document.

The licence will need to have a new plan of the of the shared office, so the parties will need to get to the detail of how the office floor is actually going to be split and how the shared areas are going to be shared.

Sometimes, if you also agreed alterations in order to separate the office space, the licence will also contain plans and description of these works.

Landlord’s conditions

Naturally, as result of your negotiations, the Landlord may come up with some conditions. Most practically common is the Landlord’s request for a separate guarantor or a guarantee (or indemnity) from you personally.

Another most common condition is that you have to pay all Landlord’s costs in respect of this licence. These, of course, can be split between you and your new office-mate.

The Landlord would also want to keep the new tenant on the hook for any breaches and they are likely to be asked to be a party to the licence, so the new tenant may also want to see a solicitor before signing on the dotted line.

When you need assistance

Once you and the new tenant and the Landlord agreed in principle to go ahead with office sharing, you might need assistance with review of terms of your existing lease, the licence, conditions, plans, alterations or the guarantee. We will be able to advise and talk you through the details of your office sharing arrangements and assist you in making this step commercially sound and sensible.

 

For further information about sharing your office space, or commercial property in general, please contact Anna Zeeva in the commercial property team in Poole on 01202 725400 or email a.zeeva@hklaw.eu.

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