IWG sees growing office demand despite ‘most challenging quarter ever’

Flexible working provider IWG was left reeling by its “most challenging quarter ever” over the opening months of this year, as Covid-19 lockdowns continued to hit its operations. In a trading update this morning, the company said quarterly revenue fell by more than one-fifth year-on-year to £528.3m, down from £691.9m at the end of March 2020. It also shed 102 offices during the past year as the company continued to cut overheads, with its total portfolio sitting at 3,301 sites. Despite this, IWG also pointed to several “positive underlying trends” as office markets in some parts of the world began to open up. It signed 54 enterprise membership agreements, as corporates increasingly looked to flexible offices amid uncertainty over the future of the workplace post-pandemic. Last month, it was reported that IWG would provide the Department of Work & Pensions and other government departments with access to its offices in the UK. That followed similar deals with Japanese conglomerate Nippon Telegraph and Telephone to provide its 300,000 employees with access to IWG’s global office network, as well as with FTSE 100 bank Standard Chartered for its 95,000 workers. Moreover, it said that it signed seven more franchising agreements over the quarter, with several more in late-stage negotiations. The company added that while occupancy levels had been falling throughout the pandemic, this levelled out in February and improved “modestly” in March, leaving it at just over two-thirds by the end of the quarter. The process of slimming down its office network also continued in Q1, with 55 locations closing their doors. However, IWG also opened 43 new sites globally during the period, growing its network by around 400,000 sq ft in total. On a regional basis, it added that south-east Asian countries were emerging from the crisis faster, and that its Chinese business was now “ahead of pre-Covid-19 activity levels”. In the US, IWG’s largest market, states such as Texas and Florida were also returning to growth. IWG said: “As we leave the first quarter of 2021, we are well positioned for a world of work permanently altered by the pandemic. “Changes to the geography of where work takes place and a new flexibility demanded by companies and workers provide an attractive dynamic marketplace for our future development.” To send feedback, e-mail alex.daniel@egi.co.uk or tweet @alexmdaniel or @estatesgazette Photo by IWG