IWG says demand for office space rising as UK companies plan for hybrid working
Workspace provider says many firms are preparing for a combination of home and office working
Last modified on Tue 27 Apr 2021 14.49 EDT
The office space provider IWG has said occupancy levels in its buildings are improving and it is receiving more inquiries from potential tenants, as it records the beginnings of recovery from the pandemic.
The world’s biggest workspace provider, formerly known as Regus, said it was experiencing strong demand from businesses planning future hybrid working, where employees split the week between their home and an office desk not necessarily inside their corporate headquarters.
The optimism from IWG came as it reported what it called the “trough” of its financial performance in the first three months of the year.
The group’s revenues fell by almost 24% to £528m between January and March, compared with the same period a year earlier, while its occupancy rate dropped to 66% from just under 75%.
IWG said its results suffered from comparison with the first three months of 2020, which came just before the March lockdown and was the best quarter in the group’s history.
The UK-listed company, which last month reported a £620m annual loss for 2020, said it believed occupancy hit its lowest point in February 2021, but has been improving ever since.
“The world of work has been permanently changed by the pandemic,” said IWG’s chief executive, Mark Dixon, on a call with analysts.
“The greater flexibility demanded by enterprises and by workers has created a dynamic market backdrop for us to grow into in years to come,” Dixon said.
Dixon added that short-term, drop-in use of its buildings by members, booked through its app, had represented under 1% of occupancy and revenues prior to Covid-19, but growing demand for temporary desk rentals meant this could account for 5% of revenues in future.
Swiss-based IWG said that as occupancy and tenant retention improved and service revenues resumed, it was looking to increase its prices where possible.
In countries that have recovered from the coronavirus crisis, particularly in south-east Asia, occupancy has returned to pre-pandemic levels or has surpassed them, Dixon said.
In the UK, IWG said it had seen strong demand at its buildings in suburban areas of London – the “hub-and-spoke model” – as companies retain their city centre headquarters, but also have smaller satellite offices in the regions or closer to their workers’ homes.
Earlier in April, IWG announced a deal with the UK government which allows civil servants to drop into private office space in IWG buildings in 10 cities.
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