Alternative office space sharing arrangements offer several benefits but are not without their downsides.
The Great Recession of the late 2000s and the rise of the sharing economy have led to a concurrent growth in alternative office space sharing arrangements. These “collaborative” or “shared” workspaces are developing as another option to traditional office leases. The workspaces are advertised as places for entrepreneurs and start-ups to have access to fully furnished offices and meeting rooms in premier locations at lower price points. They are also advertised as places for millennials to develop community, enjoy work, and have access to membership perks that they could not otherwise afford.
Lawyers and their clients could also benefit from these shared space arrangements, provided that they are aware of some of the more particular contractual aspects of these collaborative workspaces.
Contracts for shared office space do not tend to provide real property protections, including the landlord-tenant law protections available through traditional leases. Many of these contracts include a clause that expressly states that the agreement is not a lease and that the state’s landlord-tenant laws do not apply. Rather, these shared space contracts are drafted to be more analogous to a license or a gym membership agreement rather than a real property lease. This is perhaps why some of the standard forms for space-sharing arrangements define the occupier of the space as the “member” and not the “tenant.” Like a gym membership, the member under the space-sharing agreement has access to the space and equipment and may also reserve certain space for exclusive use. Depending on the shared office space, other membership perks may be available, including printing, office staff, and after-work gatherings.
As a result of the missing landlord-tenant protections, alternative space arrangements may be better for those who value flexibility over stability. Shared space arrangements tend to have short terms, with memberships for less than a year, including day passes or month-to-month memberships. These contracts may include provisions that permit the owner to terminate the contract or change the contract’s terms at any time, for any reason, or for no reason at all, upon only short notice to the member. The contract may also not obligate the owner to provide any of the services that it advertises. Because these agreements do not have the protections of landlord-tenant laws, a member’s best protection may be its ability to move to a new space and the owner’s fear of reputational damage. At bottom, these unique contractual clauses may make alternative space arrangements more ideal for a member searching for a short-term workspace solution.
Finally, the privacy rights of the member and its clients or guests may be difficult to safeguard while in the shared office space. This is true even when the member purchases a reserved or exclusive room within an otherwise shared space. Most owners will seek to retain the right to move and alter office space and furniture, which would include the right to enter a reserved room at any time. For security reasons, the owner may also want the right to constantly monitor the spaces with cameras. Although this may prevent theft, it also places confidential information at risk because of the member’s inability to escape constant monitoring. In addition, the owner may require the member to install software to access the shared space’s internet. So, on several fronts, if privacy is a major concern, a potential member may want to contract for a more traditional office space. Lawyers who review these contracts should emphasize to their clients that owners, at their whim, can make these relationships temporary.
Members should weigh other matters when deciding between shared space arrangements or a more standard office lease arrangement. The above considerations are some of the most interesting and pertinent items a person or organization may wish to consider prior to entering into an alternative space arrangement, particularly as the spread of shared office space becomes more commonly accepted.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Richard A. Toelke