14 Jul 2025
By Gregor Duthie, Legal Director, Real Estate, Gilson Gray
Since workers were first sent home in March 2020, the way we use office space has shifted dramatically. Gone are the days when every business needed a long-term office lease with fixed desks, private meeting rooms, and a kettle in the corner. Increasingly, tenants and landlords in Scotland are turning to short-term letting of co-working spaces. Whilst investors tend to prefer long-term income streams, co-working spaces can be a win-win for both landlord and tenant.
Whether you’re a start-up looking for flexibility or a landlord trying to make the most of your property, here’s why co-working might be the smartest move you can make.
How are co-working leases structured?
A co-working space is a shared office environment – usually fully furnished and often managed – where businesses of all sizes can rent desks, rooms, or even entire floors on a short-term basis.
The short-term nature typically means a licence or agreement that lasts anywhere from a single day to several months, rather than the five or ten-year commitments common in traditional office leases. The legal paperwork is simpler too – often just a few pages – and rarely involves the same level of negotiation or due diligence, since the tenant is taking on a much lesser liability.
The Benefits for Tenants
From a tenant’s point of view, co-working spaces offer several clear advantages:
Flexibility
The biggest benefit is freedom. You’re not locked into a long-term contract, and many licences allow you to scale up or down as your team grows or shrinks. This is ideal for startups, freelancers, or growing businesses who don’t know what their office requirements will be in six months, let alone five years.
Lower Upfront Costs
Traditional term leases often require deposits, legal fees, fit-out costs, and may be notifiable for Land and Buildings Transaction Tax. With a co-working licence, many of those costs disappear. The space is already fitted out, furniture is provided, and you can usually move in with little more than a laptop and a Wi-Fi password.
All-Inclusive Pricing
Whereas a commercial lease tenant will be liable for all outgoings in addition to rent, co-working spaces usually bundle everything into one monthly fee – rent, rates, utilities, internet, cleaning, and even coffee. That means no nasty surprises and easier budgeting.
Networking and Community
These spaces attract a mix of professionals – tech start-ups, creatives, consultants, and more. Being around other like-minded businesses can open doors, spark collaborations, or just make the workday more enjoyable.
Professional Environment Without the Hassle
Need a meeting room? A receptionist? A city centre address? Most co-working spaces offer these as standard. You get the image and convenience of a top-class office without having to manage it yourself.
The Benefits for Landlords
Although the flexible nature of co-working appears very occupier-friendly, it’s not just tenants who benefit. Landlords and property owners also have good reason to embrace co-working models, especially in today’s uncertain market.
Higher Rental Yield
While a co-working setup involves shorter licences, it can often bring in more income per square foot than a standard lease. By charging a premium for flexibility and shared services, landlords can boost overall returns. If you can keep the space filled, there is potential for higher return per square foot.
Reduced Void Periods
With traditional leases, it’s not unusual for a property to sit empty for months (or longer) between tenants. A co-working model allows for quicker occupancy, with multiple small tenants reducing the risk of total vacancy.
Diversified Tenant Base
Instead of relying on one large tenant, landlords can spread their risk across multiple smaller businesses. If one leaves, it’s less of a financial blow, and the space can often be re-let quickly.
Quicker Turnaround
Unlike longer term leases, co-working agreements can be signed and implemented in days, not weeks. That means less downtime and fewer legal or administrative hurdles.
Appeal to Modern Tenants
The market is changing. Many businesses, especially younger and more agile ones, simply aren’t looking for a 10-year commitment. Landlords who can offer modern, flexible space are more likely to attract and retain these new tenants.
Legal Considerations
From a legal perspective, short-term co-working arrangements are typically structured as licences rather than full repairing leases. This gives the landlord more hands-on control over the property. However, it’s still crucial that the terms are clear and professionally drafted. We’d always recommend having a solicitor review your lease arrangements rather than simply going it alone.
For tenants, the main thing to understand is that you don’t have the same protections or security of tenure as you would under a traditional lease. As with any legal document, the pitfalls are often not so much what the document says as what it doesn’t. A solicitor can advise on any areas where unexpected liability might fall on the tenant.
Conclusion: The Future of Office Space?
We’re living through a time of economic uncertainty and rapid change in how we work. For many businesses, committing to a long-term lease no longer makes sense. And for landlords, sticking to old leasing models may mean missing out on modern demand or diversification of income.
Short-term co-working leases offer a practical solution for both sides – providing flexibility, efficiency, and value. Whether you’re a tenant looking for freedom or a landlord wanting to stay competitive, this approach is worth serious consideration.
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