Regus and Tenants Locked Out in Rent Row

In July we reported on a lawsuit filed against Regus from a former client, claiming that the workspace giant had failed to disclose hidden charges. Now, it seems Regus is having its knuckles rapped again – but this time by a property landlord.

Helix Property Advisors, which formerly leased 16,000 sq ft of space to Regus at 1000 Great West Road in Brentford, Middlesex, has reportedly chosen to terminate their contract rather than agree to new terms with lower rental values, as proposed by Regus. The two parties have been in dialogue over lease negotiations for a period of eight months. This is nothing new as Regus said that it “occasionally” enters into renewal discussions, and according to its Annual Financial Report for 2011, the company will seek to re-negotiate leases to lower rent where centres have become uneconomical.

But in a twist to proceedings, Helix has forced Regus to forfeit its lease – locking the doors to both Regus and its tenants.

The re-negotiation of Great West Road seems to have backfired; and clients are now caught in a difficult situation which has left some out of pocket. Reports claim that clients were locked out of their offices with no explanation, and required to pay an extra deposit along with a month’s upfront rent to the new operator. Half of the tenants have now reportedly teamed together and appointed a solicitor to seek compensation and damages from Regus for loss of business.

Serviced office company United Business Centres has since taken over the space at Great West Road.

According to a spokesperson from Regus the eviction came as a surprise. “Regus has been in dialogue with the landlord of 1000 Great West Road regarding the negotiation of our lease. We believed that we were close to reaching an understanding and are both surprised and disappointed by the recent turn of events.”

This is not the first time that Regus has caused a stir during negotiation proceedings. Back in 2010, Regus threatened to put parts of its business into administration unless it reached an agreement with landlords regarding rental cuts. The British Property Federation claimed Regus was manipulating a loophole in insolvency laws to force landlords to accept rental cuts, labelling its tactics as “cynical”. It was the first time that such a move was used by one part of the property industry against another.

With the UK back in recession, the Euro in crisis and global economies on the rocks, times are hard – and the property industry is certainly not immune to financial challenges. Rent reviews and negotiations are part and parcel of commercial leases, enabling business centres to operate profitably whilst still providing value for money for their clients. But has Regus overstepped the mark this time – making waves and alienating their clients in the process?

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