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Sharing space - Co-location

Sharing space is nothing new.  Cost conscious charities have been doing it for years without really considering it anything out of the ordinary. But there is now a new generation of shared office spaces.  Charities are consciously choosing to ‘co-locate’ because it saves money – but also for a whole host of other reasons.

This section of the website aims to help groups learn about co-location and the issues you need to consider.

What is Co-location?

Co-location is a broad concept.  At its most basic, it is a group of organisations choosing to share a building because of the benefits being based together brings. There are two main co-location models.

Model 1:

This is where one organisation (the landlord) acquires premises, establishes a shared building, and lets out space to a range of tenants. 

Clear planning and market research is needed to make sure that there is a demand for rentable space in the area. Building or refurbishment may not be able to commence until sufficient occupiers are signed up to rent space, ensuring a minimum cash flow to make the project viable.

However, under this model the other groups do not have a stake in the ownership of the land or in the governance of the co-location project vehicle.

It is therefore sensible to set up a tenants’ committee or a building intranet once the project is up and running.  By giving tenants a forum in which to be represented and consulted, this helps ensure that tenants are happy and feel that their ideas and concerns are listened to.

For organisations operating within the Greater London Area, resources commissioned by the Greater London Authority (GLA) may be useful. An in-depth report entitled ‘Supporting places of work: incubators, accelerators and co-working spaces’ is available to download here.

While the report is not specifically aimed at the charity or voluntary sector, it gives a good overview of co-working in London today. Organisations wishing to rent shared workspace within London might find the interactive map of open workspaces in London on the GLA’s website useful, available to download here.

Model 2:

The alternative model is the democratic, or what could be considered the true, co-location model.

A group of organisations come together to jointly acquire a property that they will occupy together, sometimes with some additional space to let to other tenants.

This model requires an even greater degree of upfront planning and will need to have a detailed membership or collaboration agreement setting out such matters as:

  • what each member of the project will contribute
  • how obligations are shared
  • what each member is expecting to get out of it
  • an exit arrangement for a party that wants or needs to leave the project

This last point is extremely important, as is the ability of the members to commit to the project in the first place.
Embarking on a co-location project, whether as a standalone landlord, or as a joint venture, is a significant undertaking. But, with the right planning, advice and partners, successful projects can, and have, delivered real benefits to both landlords and tenants.  

Other issues to consider

While co-location has many tangible advantages for organisations, there are a few issues that might be worth considering when deciding whether to collocate to decide to rent or buy independently.
If branding is important to an organisation, having a designated space may provide more scope to establish a clearly defined ‘presence’. However, shared spaces can be designed to allow for this – be it through clear signage or branded furniture or room dividers.  If a an organisation decides to co-locate under Model 2 above, it is worth discussing issues of ‘image’ early on. Where there is a sense of shared purpose, arriving at a unified ‘image’ will be easier.
Some organisations dealing with confidential information or vulnerable clients might find that co-locating does not provide them with sufficient privacy and security. Consideration should be given to this before any agreement is being entered into. In some cases, having a designated private space for sensitive meetings and phone conversations as well as secure, lockable storage for confidential paperwork might suffice. Other organisations might feel that a discrete entrance to their premises is essential to guarantee client confidentiality.

Benefits of Co-location

Co-location can enable the groups involved to reduce costs through sharing office overheads, generate unrestricted income from rent, or contribute to their charitable objectives by housing small or vulnerable organisations.
It also opens up opportunities to share information, resources and facilities – many of which would not be available or affordable to a charity or community group going it alone. Securing more professional, better located space is also an attraction.

Organisations choosing to work together to acquire premises are often driven by a wish to work more strategically together – perhaps in response to political pressures to see consolidation in the sector.

Smaller organisations reap greater benefits as tenants in shared buildings because it opens up opportunities that their size would otherwise limit. Being able to buy a comprehensive support package from a landlord, rather than having to organise separate IT supply and support, cleaning and waste disposal contracts, for example, is a real boon for start-ups.

As an organisation grows, these benefits become proportionately smaller. But ultimately, an organisation may outgrow a shared building, and require its own space.