Apr 082021

Business incubators are often not associated with businesses or businesses, but start-ups can benefit from an incubator period. often referred to as “business incubators”; “Innovation centres” (or often “Techniums” in Wales) are specialized spaces, adapted to the needs of science start-ups and technology start-ups (and generally different from those of Science Parks, which generally host more established companies). 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. 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: in the case of the young start-up, the tenant of the incubator often prefers a shorter rental contract in order to be able to equip a larger space in case the growth of the activity continues. This can also benefit the owner, as start-ups have a higher wear rate and, as such, short-term leases can offer landlords the flexibility to retain only tenants who have good financial results. 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. 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. 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.

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