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Considerations for Commercial Real Estate Investors in the Coworking Industry
Investing in coworking spaces requires a careful consideration of both the business environment and the legal regulations. In the Chicago area, investors will need the advice of a Chicago real estate attorney regarding liability, health and safety, zoning, and accessibility requirements.
For commercial real estate investors, the coworking industry is a unique type of investment. You will routinely face operational challenges, and you’ll deal with legal matters that seldom, if ever, arise when you invest in traditional commercial real estate.
Nevertheless, coworking spaces are now seen by many real estate investors as a safer investment. While single-purpose factory or office spaces typically depend on the success of only one business, the success of a coworking space is not dependent on any single company or customer.
How Does Coworking Work?
A coworking company usually signs a long-term lease, or else it buys a building outright and then sells short-term (daily, monthly, or annual) memberships to companies or individuals. Many members are startups or small businesses, but members may also include major corporations.
Daily and monthly rates for coworking spaces vary depending on the type of workspace and the location. Members may have a desk in a common area, a desk that is reserved, or a private office. And like everything else in real estate, the success of a coworking space may depend on location.
Members favor sites near restaurants, gyms, and coffee shops, which make urban areas attractive and requires difficult location choices in suburbs and smaller markets. When zoning is an obstacle, a real estate lawyer can often help clients obtain entitlements for coworking locations.
What Else Must Be Considered?
Investors should understand that coworking spaces need more direct management and more customer service than traditional commercial real estate. Coworking spaces thrive when a strong and vibrant community is established among the members.
Many coworking spaces provide a variety of services and amenities. To draw and keep members, investors should routinely reassess the preferences and needs of their target market, invest in appropriate, high-quality amenities, and provide their members with outstanding services.
An investor will need comprehensive marketing that emphasizes the unique benefits and features of your coworking space. You might decide to offer specialized services or amenities, create a niche coworking environment, or target a particular industry or demographic.
What Legal Issues Arise When You Invest in Coworking Spaces?
Coworking spaces first appeared in the United States in San Francisco in 2005, but by 2017, there were 13,800 coworking spaces around the world. It’s taking lawmakers some time to catch up, and generally speaking, the laws regarding coworking spaces and leasing are still evolving.
Legal issues that may arise when coworking sites are leased include liability issues, property rights, and the determination of responsibility for unanticipated costs. Legal details and restrictions on business use have the potential to prevent the success of coworking spaces.
What Advice Will Your Real Estate Lawyer Offer?
Commercial real estate investors should seek independent legal and financial advice, including advice about liability and tax consequences, before making any investment decision. In the Chicago area, investors should have the advice and insights of a Chicago real estate lawyer.
Real estate financing, management, and development involve a number of contractual and regulatory issues. Your Chicago real estate attorney will scrutinize the pertinent legal documents to ensure that you remain compliant with local, state, and federal law.
Because legal issues inevitably emerge in commercial real estate transactions, if you are investing in coworking spaces, your real estate attorney will make certain that you understand fully your legal obligations and your legal limitations.
What Else Should Commercial Real Estate Investors Know?
In the state of Illinois, land use and real estate are governed by a number of complicated statutes, court rulings, and legal principles that address permitting, zoning, eminent domain, dispute litigation, and other concerns.
Your lawyer should be substantially experienced in commercial real estate law and up-to-date regarding ever-evolving land use and real estate laws at the federal, state, and local levels. Your lawyer should also have experience in commercial lease litigation.
Your Chicago real estate lawyer will review every key document, advise you against any decision or action that puts your long-term best interests at risk, and make sure that your real estate investment, transaction, or lease is fully compliant with local, state, and federal law.
What Happens if a Legal Dispute Emerges?
Unanticipated legal issues can arise at any time when you invest in coworking spaces. Consulting a real estate attorney in advance about your investment may reduce your long-term expenditures and help you avoid disputes in the future.
Nevertheless, and despite your best efforts, a real estate dispute may emerge. Whether a dispute arises from the misunderstanding of a document, a conflict with a zoning law, or a dispute with the owners of adjacent properties, you’ll need a good real estate lawyer.
However, when both parties are acting in good faith, these disputes can usually be resolved outside of the courtroom. Your real estate lawyer will almost always recommend seeking a resolution through mediation, arbitration, or private negotiations.
Avoiding court is typically in everyone’s best interests, but if a dispute can’t be settled privately, a civil court will settle it. Commercial real estate investors in Chicago need an attorney who is skilled and experienced in litigation, commercial real estate law, arbitration, and mediation.
Nery, Richardson & Konewko Advises and Represents Real Estate Investors
If you invest in a coworking space in or near Chicago, let an Illinois real estate attorney at Nery, Richardson & Konewko protect – and if necessary, fight for – your best long-term interests. We represent investors and anyone buying or selling commercial real estate in the Chicago area.
A real estate lawyer at Nery, Richardson & Konewko will take the steps to help you reach your investment goals and meet your legal needs. If a conflict emerges, Nery, Richardson & Konewko has considerable experience resolving the most difficult real estate issues.
For advice or representation regarding investment in coworking spaces or in traditional commercial real estate in Illinois, schedule a consultation with Nery, Richardson & Konewko by calling 773-232-6643. We provide the advice and representation that real estate investors need.
