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Over the last decade, the way we work has changed dramatically. Technology has decoupled traditional associations of work and location, paving the way for a mobile workforce and a rethinking of how businesses use workspaces. Space as a service now makes up a considerable market share of the commercial real estate industry. However, the need for added flexibility came with a shift away from traditional leasing models. So, how is the legal relationship different, and what are the implications for services such as WeWork? What does the new paradigm mean for co-workers and space providers, particularly in the wake of COVID-19?
Space as a service agreement, or co-working agreement, are licenses, which are separate and distinct from leases. By design, the co-working agreement provides the licensor with more flexibility, and legally they are more like gym or club memberships. Flexibility and the retention of control however, may have the unintended consequence of licensors having heightened responsibilities to their customers.
The biggest difference in these two types of agreements is a lease gives a tenant more control, such as exclusive possession of a space. But in co-working agreements, the licensor maintains control, and the “tenants” must share their workspace and all the amenities. In a traditionally leased building, tenant spaces are not shared and common areas are limited to parking decks, cafes, elevators, fitness centers, restrooms, lobbies and shared conference rooms. In a co-working environment, every area is a common area, and no tenant has exclusive control over any area. The licensor maintains control over the space.
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