By Ron Bockstahler

Recent events in the shared office space realm compel me to update this article with a couple of very important points that were not mentioned originally. Today I met with an attorney who was originally introduced to me more than three years ago when he was considering changing his office space. At the time, my company didn’t win his business because he wasn’t unhappy with his space and the perceived hassle of changing addresses for active cases just didn’t seem like it was worth it at that time. Two days ago, the shared office this attorney runs his law firm out of, a large international shared office company, provided a 13-day notice that they are closing the center and all tenants will have to relocate to one of their other locations or find new office space on their own. Now anyone that has ever looked for new office space knows that 13 days is hardly enough time to secure new office space and coordinate a move, especially if your firm has a large active caseload.

Last night I was reminded of another operator that closed their offices and gave their tenants less than two weeks notice to vacate. Many tenants believe that there is little chance of this happening if they join a large national or international co-working company or hared office provider. But almost all the large providers set up each of their locations as individual LLC’s, making it very easy for them to close the non-performing centers with little to no recourse to their parent company. When they do close a center, they provide a very short notice to force their clients to move to another one of their centers that are remaining open.

It’s impossible to eliminate the risk of a center closing, but here are a few questions to ask that will help minimize the risk of going through this very difficult experience. First, inquire about the remaining lease term at the center you are considering. If the co-working operator owns the building, ask them about future plans, what their building-hold strategy is and if the co-working operation has a lease with the building, even if both have the same owners. The next question is to find out what the current occupancy of the center is. We use 85% as a measure of full occupancy and anything under 70% is a red flag that the center could be on the block to close soon. The obvious exception to this is if the center opened less than a year ago and is in the early stages of leasing. To that point, a new center is generally a safe bet that it will remain open for the next 1-2 years, regardless of occupancy. Finally, make sure you understand if the operator is a local, regional, or national operator.

There’s no question that from time to time, offices will close for various reasons, many reasons that are out of the control of the operator. The issue is when operators do not provide adequate notice for tenants to research options and make an educated decision on a new office space. If an operator only has one center, that should be a red flag and you need to scrutinize the deal they are offering very closely. Regional operators usually have several centers, are privately owned, and generally go to extreme lengths to protect their reputation. Even if they do close a center, chances are they will handle it in a professional manner, providing as much notice to clients as possible to protect their reputation in the industry and in their areas they operate.

The last point I will make is regarding taking an office with another law firm. For example, I have worked with several lawyers that have taken an office with a law firm that has a direct lease. The comments I hear most often when a lawyer is electing this option, is the cost is cheaper than a professional co-working operator and they do not need to sign a lease. It is true that the cost is generally cheaper because the lessor law firm is looking to offset a small portion of their fixed expenses for a short period of time. However, the benefit of not signing a lease, often, becomes a liability when the law firm provides a very short notice, generally less than two weeks, that the lawyer must move out because the law firm has hired new staff and will need the office. This almost always leaves the renting attorney in a difficult position at the most inopportune time.

You still want to focus on paralegal support, professional atmosphere and amenities, private office options, the legal network opportunities, and location. But even before you consider these things, make sure you are working with a reputable operator and that the location you are considering checks all the boxes highlighted above. Doing due diligence prior to selecting your next office will save you time and money in the long run.

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