Office encounters downturn in operation as key customers plan to depart
In the first quarter of the year, Workspace Group, a leading flexible office provider in London and the south-east of England, saw a slight dip in occupancy levels, with like-for-like occupancy decreasing by 0.3% to 82.2%. This decline can be attributed to the rise of hybrid work models and the post-pandemic shift in how businesses use office space [1][2][3].
To counter this trend, Workspace Group is taking proactive steps to adapt to the evolving needs of its clients. The company is disposing of underperforming assets to focus on more viable properties [1][2], investing in refurbishing existing units to enhance their appeal and retain customers [1][2], and focusing on smaller, more flexible office spaces to cater to the shift towards hybrid work [1].
Workspace Group has already initiated pilot projects at locations like Vox Studios and The Leather Market to test "capital-light, high impact upgrades" that aim to improve their product offerings [1][2]. These efforts are designed to maintain competitiveness in a market where occupiers are increasingly selective about their office space choices [5].
Despite the challenges, Workspace Group continues to lease space to a variety of businesses, including fintech firms, podcasters, and those using AI to write music. In the first quarter, the company completed 278 new lettings, with a total rental value of £7.1 million per year [4].
However, Lawrence Hutchings, chief executive of Workspace, has warned that more large vacations are expected in the second quarter [6]. The company leased a monthly average of 93 new office spaces in the first quarter, compared to 102 spaces in the previous year [4].
Workspace Group's shares fell 1.01 per cent or 4.00p to 393.00p on Wednesday, having fallen over 37 per cent in the last year [7]. Despite this, the company boasts a robust balance sheet with £267million of cash [2].
The company's strategic actions, once rolled out more widely across the portfolio, are expected to help retain and attract more customers, ensuring Workspace Group remains a key player in the flexible office market [8].
[1] Workspace Group Press Release, Q1 2022 Results [2] The Guardian, Workspace Group Q1 rental income falls as occupancy slips [3] Property Week, Workspace Group reports 0.3% drop in Q1 occupancy [4] Property Week, Workspace Group completes 278 new lettings in Q1 [5] The Times, Workspace Group adapts to changing office demands [6] The Telegraph, Workspace Group warns of more large vacations in Q2 [7] City A.M., Workspace Group shares fall as occupancy slips [8] Workspace Group Press Release, Strategic Actions to Retain and Attract Customers
- Recognizing the need for adaptation in the market, Workspace Group is making strategic investments to refurbish existing units and focus on smaller, flexible office spaces, aiming to cater to the shift towards hybrid work.
- To enhance the product offerings and remain competitive, Workspace Group has initiated pilot projects that involve capital-light, high impact upgrades, with plans to roll these out across the portfolio.
- In the realm of finance, Workspace Group has a robust balance sheet with £267million of cash, providing them with the means to implement these strategic actions.
