NEWS & EVENTS

16/11/2015

Viewpoint: Café culture. The pros and cons of creating caffeinated working environments

coffee

Estates Gazette has been looking at the concept of the cafe office co-working environment, evaluating what customers and workers want from such a space. But what are the implications for occupiers and landlords of combining the two?

Andrew Marshall, looks at the regulations and issues involved.

Are food retailers missing a trick by allowing customers to work in their café without charging a rent?

Who hasn't had a meeting in a coffee shop, or sacrificed the diet for a flapjack and latte in return for a couple of hours sending emails using the free wifi? It is fairly commonplace these days, and the relaxed atmosphere is increasingly attractive for the younger generation and the growing freelance workforce.

There is an argument for allowing the informal use of eateries for those clearly working, after all most people will at least order a few pounds-worth of goods, and their presence can help an empty venue seem more interesting and full.

But, if these customers turn into tub-chair-hoggers eeking out a single cappuccino all day, it's easy to see where operators might feel they are losing revenue and potentially missing a trick by not charging a rate.

Regardless of the unpopularity of such a move, and the potential of alienating a large portion of the customer base, there are significant regulations which would affect any cafe operator looking to charge for space, whether that was informally done or tables set aside in a dedicated "work zone".

Coffee shop

Consulting the lease would be the operator's first task, there are likely to be clauses that exclude the use of the space for other businesses. Leases are intentionally strict, in part to ensure the landlord can be confident in the ability of the tenant to pay their rent, and variations are not often welcomed as they require a repetition of the due diligence, legal procedures and costs.

There's the chance it could be considered the space has been otherwise assigned, which is a legal matter that could also void the tenants's lease. Landlords could allow for the lease to be changed by deed of variation, but would they consider it to be in their own best interest?

From the landlord's perspective, any move towards creating the precedent for office space within a retail unit is likely to be opposed, if only to avoid any bid by the operator to reduce their rent, as office space is traditionally much cheaper per square foot than retail. And an operator who successfully demonstrated the change would significantly boost their business, could face a rent hike at the next review.

And then there's the local authority interest. Food retail is a different user class to office space and there is the danger that the operator could be in breach of planning permission. The Valuation Office may even come knocking with a bill for an increased business rates if the premises could arguably be described as an office space, with a loss of the rate relief enjoyed by some food retail and licensed premises.

So altering the operation of an existing business may not be the easiest of moves. But that's not to say there's not a place in the market for an operator offering a mix of food retail and office space. Informal working environments are increasingly popular and it may be that landlords themselves could even be open to the prospect of two operators working together to provide a mixed-use facility, especially in some of the high number of empty high street units up and down the country, if the business plan stacks up.

 

Andrew Marshall For further information regarding this topic, click here to contact Andrew.
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