Your Actual Exposure: $750,000

A $15,000/mo tech startup lease doesn't create $15,000/mo in liability. It creates $750,000 in total exposure across rent, personal guaranty, restoration, and every other clause your landlord drafted to protect themselves — not you.

Where $750,000 Comes From

Remaining Rent$450,000
Personal Guaranty$180,000
Restoration$50,000
CAM Charges$45,000
Early Termination$90,000
Legal Fees$25,000
Holdover$90,000
Total Exposure$750,000

What Most People Miss

The occupancy cliff. Coworking unit economics work at 70%+ occupancy. Below 60%, you're subsidizing members with your own lease payments. Your $15,000/month lease doesn't flex — your revenue does.

Key Risks in This Scenario

  • Master lease with 5-year term while members sign month-to-month creates catastrophic mismatch
  • Occupancy rate below 65% makes the unit economics unworkable
  • Sublease of individual desks and offices may require landlord consent not explicitly granted

How to Reduce Your Exposure

  • Negotiate revenue-sharing or turnover rent with the landlord so base rent steps down if occupancy falls below threshold
  • Get explicit sublease right for all configurations in the permitted use clause

Frequently Asked Questions

Do coworking operators need a special sublease provision?
Yes. A standard lease's sublease restriction could make your entire business model a lease violation. Negotiate an explicit right to sublease individual desks, offices, and meeting rooms to members.
What does coworking space build-out cost?
High-quality coworking build-out with private offices, phone booths, and kitchen runs $80-150 per square foot. On 5,000 sq ft, that's $400,000-$750,000 — most of which is restoration liability at exit.
What is the failure rate for independent coworking spaces?
High. The market is dominated by WeWork, Regus, and IWG. Independent operators without differentiated positioning often fail within 2-3 years — still inside a 5-year lease term.
Can I get out of a coworking lease if occupancy collapses?
Not without paying. Early exit costs 3-6 months rent minimum. A $15,000/month lease costs $45,000-$90,000 to exit, regardless of whether your members are paying you.
Should coworking operators take a gross or NNN lease?
Gross leases are better for coworking — predictable costs let you set consistent member pricing. NNN lease cost fluctuations are hard to pass through to month-to-month members.