In this work, we study Cooperative Spatial Intelligence, the ability of decentralized embodied agents to coordinate effectively under dynamic environmental constraints across city-scale outdoor domains. We introduce Sentinel Challenge, a benchmark where multiple decentralized embodied agents must communicate in natural language to agree on a mutually safe and convenient meeting point within large, city-scale outdoor environments. Each agent must then navigate safely while avoiding dynamic sentinels patrolling the area, using a tool that provides coarse spatial information. To address this, we propose CoSaR (Cooperative Spatial Reasoning and Planning), a framework that bridges the high-level communication and planning abilities of foundation models with the precision of classical spatial navigation algorithms. CoSaR enables agents to exchange situational updates, reason over evolving spatial constraints, and collaboratively replan trajectories. Evaluated across 14 city-level scenes with 3-5 agents, CoSaR consistently leads to faster gathering, shorter path lengths, and improved safety. Our results demonstrate that integrating dynamic communication with spatial reasoning is essential for robust multi-agent cooperation. By formalizing this new setting and providing a scalable benchmark, we aim to build a foundation for advancing cooperative spatial intelligence in embodied multi-agent systems. Code and challenge are available at https://github.com/UMass-Embodied-AGI/Sentinel.