What’s the longest lease for a coworking place or other businesses that you know of that works well? Anything 15 or 20 years or more?
After getting paid to do this for 6 years, and having experimented with not actually leading coworking for a portion of that, I can see doing it for 50 more years or my entire paid work, whichever is more.
Why not buy: I don’t currently personally have resources to buy a multi-million dollar building, and we’re not yet where I see us buying a building as a group, and I (and most members) see us growing into multiple locations, so we could always buy buildings in the future.
Why not do a shorter lease: When a lease ends, my sense is that rents go up, and in Portland Oregon, rents have gone up quite a bit and seem to be on track to go up quite a bit. I haven’t found owners would would put a renewal option into the lease other than to renew at ‘market rate’ which isn’t really a renewal option.
The plus to a shorter lease could be that the business model is revised in 5-7 years (moving out totally benefited us after 5.5 years at our first location, when we moved to two very different locations), but right now we are doing well with the current business model, and while I see how that could change, it doesn’t seem likely.
So I could see a longer lease being better than a 5- or 7- year lease. Do you know of businesses, or coworking places, that have signed long leases and enjoyed that? The longest I know of for coworking are 12-year leases, and that seems like it can work great; I know one company where it makes total sense. I could see doing a 15- or 20- or even longer lease, with the option to sublease or assign the lease. I’ve heard of one big retail company that does 75-year leases, which seems too long to me, but where I’m at right now, I could see between 15 and 20 years feeling good. I could also see doing 7-year leases, and renegotiating or moving every 7 years, and having rent go up 15% every year until we hit peak, whenever that will be (I don’t think we will for at least 15 years).
A related question is risk management; if we have 2 venues now and grow to more, what are the risks of growth and other risks (obviously not growing too fast or overcommitting – which could be what a too-long lease does – but under-committing seems to be what a too-short lease does, so it seems to balance out), and how does one balance that.
Would love your perspectives and hearing about your own experiences.
Alex Linsker | Business Owner
(503) 517-6900 office | (503) 369-9174 mobile
3050 SE Division, Suite 245 | Portland Oregon 97202
1410 SW Morrison, Suite 850 | Portland Oregon 97205