- For workspace operators, target audience, competition, and economic factors are crucial to consider when choosing a new location.
- When signing a lease, deal structure, aesthetics, and amenities must be well understood.
- Giovanni Palavicini, a principal operator at Avison Young, takes us through location and lease red flags and more.
There are many details that operators need to consider when looking for a coworking space.
No two spaces are the same, and there are some crucial components related to finding the right space, and signing a lease.
Giovanni Palavicini, a principal operator at Avison Young, told Allwork.Space that the first step in any such decision is to look for a space that aligns with your company’s values.
“When choosing a coworking space, it is crucial to keep in mind your goals. What exactly is the reason you are looking to lease a coworking space?”
Think about your target audience and what type of space they will need. Is it simply a back-office setup? Or a place for clients to hold important meetings? After all, the people who will occupy this space largely constitute which space you ought to choose in the long run.
Some spaces are more accommodating for back-office work, whereas others are better for open space collaboration and meetings or events.
“Ensuring that the amenities available in the coworking space you are looking for are aligned with your goals is easy to overlook, but it should be the first thing you take into consideration,” Palavicini said.
In particular, these amenities should take into account who your target audience is, who your competition is, and the economics of the deal you’re considering.
“In addition to this visibility, access and nearby amenities are important for success,” he said.
Hence, when considering location, one must consider whether or not your target audience will be happy with the local vicinity, as well as the coworking space itself.
Is transportation convenient? Is there good food and drinks nearby? Are there places close to the coworking spaces for recreation where you, or your members, can go to wow clients?
These are the questions to ask yourself before signing on for a coworking space.
Some particularities to consider include parking, window lines, visibility, and natural light. These are especially important factors to consider if your business’s success depends on the space in question.
A place with poor visibility, no parking, and bad lighting is much less likely to win over clients than its positive counterpart.
What about leases? Operators are responsible for negotiating deals with realtors. This responsibility, however, tends to get overlooked:
“Second only to the location is deal structure. If the operator does not negotiate the right structure it will be an uphill battle,” Palavicini told Allwork.Space.
Part of the reason for this being overlooked is because oftentimes it is unclear who will even be signing the lease, let alone negotiating it. That’s why one of the first things to consider when signing a lease is clarifying who will actually be signing it. Many operators, for example, do not sign leases, whereas franchise-driven organizations do.
“Generally, however, anyone who may sign a lease for a coworking space needs to understand the terms of the lease agreement. This may require you to understand some legal jargon or to hire a real estate expert and attorney who does. It is, in fact, relatively common for potential leasers to overlook these terms, resulting in signing a bad deal,” Palavicini said.
Getting roles straightened out within your organization, therefore, is essential to avoiding signing a regrettable deal with a potential working space.
Sometimes, from your own end, you may have done everything correctly. Perhaps the location is “perfect.” You’ve gotten your roles straight and are ready to sign the deal!
Not so fast.
Just because things look perfect doesn’t mean they are. Just because the location has the right amenities doesn’t mean that it is, by necessity, a good deal.
But what makes a deal worth signing on for?
If you are taking over an existing coworking space, take a look at its operating history. This may show up some red flags.
“What is its track record? Has it had success? Or is it rife with controversy and bad reviews? Of course, almost any coworking space is going to have some bad reviews; but if these reviews define the company you are considering, as opposed to merely being one-off incidents, you have a red flag on your hands,” Palavicini said.
As operators, the number one priority to consider will be the deal structure.
The structure of the deal/lease can raise red flags in various ways, but most crucially – according to Palavicini – the securitization of the lease. Without a tangible securitization of the lease, such as a deposit, problems are likely to arise down the line after signing.
Operators, therefore, are obligated to look over the structure of the lease with a fine-tooth comb and to negotiate a better deal if red flags such as unclear securitization are apparent.
Operators are wise to investigate coworking space locations prior to any sit-down discussing the prospect of leases. There is no point in negotiating a deal for a poor location.
And in order to investigate such spaces effectively, operators need to research their target audience and business goals and ensure that the space’s location meets their demands.
Getting a good coworking space location, along with a fair lease, is a fairly common challenge for operators. Utilizing Palavicini’s principles, however, can help operators overcome such challenges, and perform their duties successfully to the benefit of their business and business partners.