Friday 18 October 2019

Don't let a flexible office tie you up in a legal knot

Co-working and hot desking are becoming ever more popular. Solicitor with Ballsbridge-based firm J R Sweeney & Co, Grainne Cunningham takes a look at the pros and cons of desks for hire, from a legal perspective

You may be using flexible office space, but the terms and conditions of your agreement should always be recorded in writing to reduce any possible misunderstandings. Stock image
You may be using flexible office space, but the terms and conditions of your agreement should always be recorded in writing to reduce any possible misunderstandings. Stock image
Grainne Cunningham

With a steady decline in the popularity of long-term leases and single occupancies, the serviced-office market is going through a mini boom. It grew by an impressive 43pc over the past two years, with double-digit growth expected to continue, according to analysis from provider Click Offices.

Short-term and co-working tenancies absorbed nearly 5pc of Dublin's office space last year.

Buildings in prime urban centres offer flexibility and city centre access to start-ups, freelancers and satellite workers.

Serviced office space doesn't come cheap but the 30-day notice term can work well for tech companies and entrepreneurial ventures, which tend to start off small and grow quickly.

Sharing an office space with other like-minded people can also have other intangible benefits in terms of collaboration and networking. Most providers emphasise the importance of 'community' and offer perks such as free meeting spaces, audio-visual equipment and often organise influential speakers for venue events.

However, there are legal pitfalls to be aware of. For instance, it is important to consider your security of tenure. If you are renting month to month but really want to stay a minimum of six months, you should limit the potential for rent increases in your agreement or you may be vulnerable to rapid price escalation.

The terms and conditions of your agreement should always be recorded in writing to reduce possible misunderstandings.

Another key issue in the new age of GDPR is the need to safeguard private communications in an open-office environment.

Know your obligations regarding client/customer data and be aware of potential eavesdroppers when making calls or sending confidential information to a shared printer.

Architect Rachel Carmody worked on a number of co-working fit-outs in London and is now overseeing the transformation of Cluster on Dublin's Westmoreland Street.

She has a keen eye for the pros and cons both for landlords and occupants.

"Beware of hidden costs, such as charges for using the meeting spaces more than a set number of times a week. They can really add up," she said.

On the other hand, building owners need to consider whether they want to simply rent office space to multiple companies or would prefer to get into the business of desks for hire.

"Hot-desking adds a layer of complexity," said Ms Carmody, as it is necessary to have a full-time building manager if there is a high turnover of tenants entering and leaving the premises.

Landlords who rent out unutilised space short-term should use carefully drafted leases or licensing agreements to cover liability issues, such as who will pay if one tenant causes damage to another tenant's property.

It is also vital for a landlord to have control over any new party occupying the premises. With short-term lets, it is even more important for a landlord to have veto rights over sub-lets to an unknown third party.

Sarah Sweeney, who works for Carrick-on-Shannon technology company Cora Systems, spends three days a week at her rented desk in The Brick House on Mount Street, in Dublin city centre. She wishes she had discovered co-working years ago.

"I would recommend it for any business with under 30 staff, as it avoids you having to enter into a long lease and all the complications that go with that."

Sweeney, who spends two days a week in Carrick-on-Shannon, Co Leitrim, said the initial plan was for her to work from home but she has so many meetings with clients that her Dublin city location has shown itself it to be more appropriate.

"You can pre-book a meeting room here but I prefer to just use the available free space, because meetings get rearranged all the time. I just bring clients wherever they are comfortable."

Privacy was a key concern for solicitor Wesley Hudson, who runs his law firm from a four-office suite above the former Bank of Ireland headquarters in Dún Laoghaire.

"We were always conscious about how clients would perceive it, but people seem to get the impression that we own the whole space. It's a landmark building on the main street, with everything on our doorstop," said Mr Hudson.

"It's cost-effective and it gives us a great opportunity to mix with the other businesses here."

Membership manager of the CHQ-based Dogpatch Labs, Jake Phillips, stressed that it is important to be selective about the type of companies moving into the workspace in order to preserve the creative mix, which is a key selling point of the enterprise.

For instance, a recruitment firm would not be suitable. "Recruiters would not be a good fit as there would be a risk of them poaching talent," he said.

Prospective companies also need to be mindful that the carefully-constructed 'community' is not for the long haul.

Once a company is renting desks in the double digits, its days are numbered.

"We have to push them out, this is not a permanent solution," he said.

So, although the trend is all about transience, co-working and hot-desking are gradually replacing concrete and glass boxes with their cool décor open spaces and barista-style coffee.

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