What’s going on:
Regus is claiming that the video game company owes them around $2.1 million in missed fees and is filing for breach of contract.
According to the legal action, in October 2021 Activision entered into a contract with IWG’s Regus at their 2450 Colorado Avenue office location to use 78 office suites at a monthly rate of $233,000, according to Santa Monica Mirror. The deal was through November 2022 and was renewed through February 2023 – for an updated monthly base fee of $254,000.
Activision and Regus, who were negotiating a lease extension, had been in talks about potentially adding an additional three-month period to the contract; however, when Regus allegedly proposed an exorbitant rent hike, the talks came to an abrupt end.
Activision asserts that Regus owes them hundreds of thousands of dollars and that they had paid the full amount for the six-month term. On the other hand, Regus claims that Activision breached the agreement by not fulfilling its payment obligation.
Why it matters:
Lawsuits involving missed payments to building owners from tenants are a seemingly common type of litigation within the coworking industry.
In some unique cases, landlords of buildings have sued coworking companies to allegedly recoup missed monthly payments. In March, Clint Reilly Landmark Properties filed a lawsuit against coworking company Knotel, owned by Newmark Group Inc, asserting that they had not been receiving payments for its 15,000-square-foot lease of their 465 California St. building in San Francisco – for nearly half a year.
How it’ll impact the future:
Due to the rise in inflation and rent, and other economic factors like tech companies issuing large amounts of employee layoffs, coworking centers might experience an increase in litigation regarding missed payments from tenants because massive building contracts might not be getting paid fully. This potentially could lead to a rise in the number of coworking spaces closing this year.