In this article, we have highlighted only a few of the considerations that tenants must take into account when using incubation spaces, from choosing the right asset in the right location, to questions about rental conditions, rent and access rights. But there are many more reflections that go beyond those highlighted here and we would encourage any start-up that would first want to give a place for early legal advice. The experience of supporting small businesses, from their initial demand for space to the management of their real estate portfolios, as their businesses grow, particularly in the negotiation of incubator leasing contracts, shows that there are a number of important considerations that tenants and landlords need to know in the same way to maximize the value of their property. These considerations are explained below: The UK property market is generally geared towards longer leases for financial security tenants, which maximize rental income for landlords. Commercially, this can also lead the owner to have a stronger negotiating position. Another point that the founders should consider is the degree to which the lease allows them to benefit from the common parts, facilities and infrastructure of the incubator and possibly a related research organization. The incubator tenants will use more common rooms than any office tenant, so the tenant should ensure that everything they need is provided. For example, “as a general rule, a small start-up has only the means and the ability to rent a single space that must meet the different needs of the company.” One of the potential drawbacks of such flexibility is the complexity of legal documents. It is generally not appropriate to have a complex form of rental for a small incubation room, and for a tenant who is not familiar with these real estate documents, this could increase the legal fees for the unwary. Tenants in the initial phase of the business may consider applying for rental leave or staggered rents, in addition to the requirement that the landlord perform all necessary equipment work on the property.
This can be useful if a high quality laboratory is needed or if a tenant does not have sufficient resources. When negotiating this rental element, the tenant must justify a financially flawless transaction, so that the lessor can ensure that the business fits into the tenant mix in the business incubator. For similar reasons, tenants will generally find that their leases are excluded from rent security. In short, this means that at the end of the life, the tenant does not have the legal right to renew the tenancy agreement – if the landlord wishes, he has every right to leave the tenant on that date. In addition, it is often advantageous for a landlord to have the flexibility to move tenants within the incubator site to the most suitable premises for a particular tenant, which frees up smaller spaces for new offerings. As a result, tenants may find that they are required to “finish” a larger space or to leave the incubator area completely when they reach a certain size. Such requirements can even be incorporated into the owner`s standard rental form, and this is something that tenants should keep in mind. While higher rent can generally benefit the landlord, the landlord, as far as the incubator space is concerned, will often make more profit to be an early investor in his more prosperous business nurseries. The lessor may even try to incorporate provisions into the lease so that he can pay a percentage of the royalties in case the company develops a successful product. In this context, the owner should not try to rent a start-up business from the incubator.