Office space provider IWG says recovery taking longer

[BENGALURU] Office space provider IWG on Tuesday signalled that it will shut more underperforming centres as the market recovery from the coronavirus pandemic was taking longer than anticipated, but said it was seeing increased demand for hybrid work.

The pandemic has caused a radical change in the office space sector as employers opt for shorter leases and employees increasingly choose to work from home, forcing providers to adapt their business and properties to hybrid working.

"We have made additional provisions for further network rationalisation as the recovery from the pandemic continues to take longer than we anticipated last summer," the FTSE 250 firm said.

IWG, however, said it has seen increased demand for hybrid working space and suburban locations amid the seismic shift to remote working.

Work-from-home policies and the economic fallout from the pandemic have hit revenues of office space providers such as IWG, WeWork and Workspace and squeezed their margins.

As recently as this week, IWG has secured a deal with Japanese telecommunications group Nippon Telegraph and Telephone allowing the client to access any of its more than 3,300 offices rather than just desks at a specific location.

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The Regus brand owner posted an adjusted operating loss from continuing operations of 173.8 million pounds (S$323.18 million) for the year ended Dec. 31, 2020, compared to a profit of 136.8 million pounds a year earlier.

REUTERS