One of the biggest changes to the office market in recent years has been the increase in the number of serviced offices. A significant number have appeared, with tenants signing “easy in, easy out” leases instead of the umpteen page landlord’s standard “full repairing lease”, and probably getting better coffee too.
The concept isn’t new. Back in the 1990’s a very young Paul Earnshaw was landlord’s solicitor for the Newcastle Technopole, the idea being that start-ups could sign a lease of a small office on flexible terms, grow and eventually move out. IT specialist Perfect Image are a great example of this as they have expanded from humble beginnings in the Technopole to their current flagship office on Cobalt Business Park. However from the point of view of investors and funders the Technopole didn’t work- the tenants had no money, the leases were of too small a space and too short. Eventually the building changed to a more traditional office, and within the space of thirty years it is now earmarked for demolition and replacement with student accommodation.
Regis expanded the serviced office market significantly in the 90’s. The latest Short Richardson & Forth office in Manchester, opened in 2018, is in a Regis building. Andrew Swan, partner in charge of the Manchester office says “We were pleased to start small in Manchester, initially focussing on our claims management company work. The Regis office enabled us to do this, but we can move out and expand anytime we like”
Over the last decade though the likes of WeWork and their competitors have taken this idea and revolutionised the sector. WeWork, for example, took 280,000 square feet at Two Southbank London, which was the biggest letting that year and have agreed to take 285,000 square feet at Canary Wharf on a sublease from EMA. They offer anything from a hotdesk up to your own private floor, with great cutting edge design, receptionists and pool tables thrown in. At the start of 2019 WeWork had a market valuation of $47 billion meaning most landlords would be delighted to have them as a tenant, although the anticipated IPO has just been postponed, Adam Neumann has quit as Chief Executive and the company has come under pressure from investors as it is losing significant amounts of money daily. The next few months will be crucial as to whether WeWork sinks or swims. On a smaller scale though serviced offices continue to be popular, an example being The Corner Newcastle opening recently on Mosley Street (just down the road from Short Richardson & Forth). Short Richardson & Forth has been pleased to be involved in some quality serviced office schemes in Newcastle, for RIBA and a local charity amongst others. Our brief was to produce a short and fair lease that could be signed quickly so tenants can move in asap. This has been achieved with the space letting quickly and some tenants moving in within a day or two of solicitors being instructed.
Do make sure you take correct legal advice if you want to proceed with a serviced office scheme. A hot desk won’t give its user any rights in property as there is no exclusive possession, but as soon as a tenant gets their own exclusive space they can gain all sorts of rights under the Landlord and Tenant Act. Taking some time and advice at the outset to get the correct legal paperwork in place will save you a lot of money in the long run.
Short Richardson & Forth Solicitors
4 Mosley Street, Newcastle upon Tyne, NE1 1DE
Tel: 0191 232 0283