Negotiating a commercial property lease for hybrid working

As a result of the shift towards workplace flexibility, 40 per cent of UK employers now offer hybrid working options, and 25 per cent of all workers work from home at least one day per week.

Reflecting this, the nature of commercial property leases is evolving.

Traditional office leases may no longer meet the needs of businesses embracing a hybrid model. Business owners are increasingly recognising the need to adapt their office leases long term to reflect this new way of working.

How hybrid working affects space requirements

Hybrid working models may reduce the need for permanent offices that can accommodate everyone who works for a business.

Many businesses are turning to so-called ‘hot-desking’, where there are enough desks only for those who are working in the office each day.

Clearly, this means that business owners have the potential to save on operational costs by reducing the amount of office space they occupy.

Businesses should assess how much and what type of space they need. This might include smaller workspaces, shared areas, and facilities that support digital collaboration.

Considering your needs

It’s important to thoroughly analyse your needs before negotiating a new lease or renegotiating an existing one. You can do this through:

• Assessment of employee needs: Understand how your employees work best. This involves considering the balance between remote and in-office work, the need for collaborative spaces, and individual workstations.
• Space utilisation analysis: Conduct an analysis of how much physical space your business genuinely requires. Consider factors like peak in-office days, the necessity of meeting rooms, and communal areas.
• Future-proofing: The future of work is dynamic, and the needs of your business could change rapidly. Consider how the space can be adapted for future needs, such as expanding or reducing the office size or changing its layout.

These needs will be different for each company, so you should be sure to do your due diligence before committing to new lease conditions.

Clauses in a hybrid-friendly lease

Many clauses in a hybrid-friendly commercial property lease will be the same as a traditional one. However, you’ll need to apply the needs of your business and team to specific clauses when you start the negotiation process.

These may include:

• Flexibility: This can include clauses allowing for the reconfiguration of spaces to suit changing needs, subleasing parts of the premises, or even resizing the leased area.
• Lease duration and break clauses: Given the rapidly changing business landscape, shorter lease terms with options for renewal could be more suitable for businesses embracing hybrid working. Additionally, negotiating break clauses provides an opportunity to reassess space needs periodically without significant penalties.
• Technological infrastructure: Hybrid working relies heavily on technology. Ensuring the leased property has the infrastructure to support high-speed internet, video conferencing, and other digital collaboration tools is essential. Negotiating the installation or upgrade of these facilities as part of the lease agreement can be crucial.
• Shared facilities and services: Instead of dedicated amenities, businesses might opt for shared facilities, such as conference rooms, lounges, and even reception services. This can be more cost-effective and better aligned with a hybrid model.
• Cost structure: Traditional leases often involve fixed costs, but there’s a growing trend towards variable cost structures based on actual usage. This could include utility costs, maintenance, and even rent, based on the number of employees using the space at any given time.

Starting the negotiation process

You should always seek legal advice and representation during lease negotiation to ensure that your terms are favourable and reflects your needs.

We can also ensure that each clause specified to your needs is legally secure and enforceable, agreed in clear terms with the landlord and their solicitor prior to you taking up your tenancy.

Hybrid working looks set to stay, and we can help you reach the best lease agreement for your requirements.

For further information, please contact us today.