Recent difficulties encountered by landlords with their co-working tenants illustrate in sharp relief why the tried and tested safety manual of pre-lease completion checks should apply to them just as much as it does to any other tenancy.
Save perhaps where a co-working solution offers the only prospect of breathing life into long unoccupied space (and mitigating the empty rates!), landlords should resist the temptation to agree covenant dilution and place themselves entirely at the mercy of the credit of their co-workers.
Landlords face particular risks in the co-working sector, where leases are granted to newly created special purpose vehicles with no balance sheet. Their value relies entirely on income being generated from its occupiers consistently over the term of the lease: in other words “letting risk” remains a continuing challenge, rather than something which would ordinarily be transferred to a tenant on completion of its lease.
