Federal Accounting Rules Could Offer A Boost To Co-Working Providers, Hinder Traditional Office Leasing
Co-working companies may soon reap the benefit of a new federal accounting rule that will require public companies to list leases as liabilities.
While the new rules could cause challenges in the traditional office leasing sector if public companies become hesitant to have another — often expensive — liability on their hands, a loophole may serve co-working providers, The Real Deal reports.
Under the rules, if a public company has signed a lease agreement with a co-working company and that lease includes a clause that gives the provider the right to move the tenant, the public company will not be required to list the lease as a liability, TRD reports.
This gives co-working companies a competitive edge when appealing to larger organizations versus the traditional startups and freelancers they tend to attract.
The downside for firms such as WeWork, which rents a large portion of its space under traditional lease agreements, is that they will also have to abide by the regulations, meaning while its tenants may not have to list the space as a liability, WeWork would.