Inquiries for office space bounced back to pre-Covid levels in the second quarter, according to IWG, as the world’s biggest workspace provider benefitted from the boom in demand for hybrid working solutions.
The company, formerly known as Regus, added a record 900 new clients in the first half and experienced a “very strong recovery” in meeting room and day office usage in the second quarter as the company begins to see a recovery from the pandemic.
Revenues from the hiring of meeting rooms and day offices surged 40% between the first and second quarters this year, as lockdowns came to an end and businesses adopt new hybrid working patterns, in which employees split the week between their home and an office desk not necessarily inside their corporate headquarters.
“The significant move to hybrid working has created unprecedented demand for our flexible work products,” said Mark Dixon, the chief executive of IWG.
“This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices.”
While the company is seeing the green shoots of recovery – profitability improved in each month of the second quarter – losses hit £172m in the first half. In the same period last year IWG reported a £238m loss.
Total revenues declined by almost a fifth to £1.06bn as the company reported a £39m charge related to the impact of Covid-19, and said it was on track to reduce business costs by £320m compared with before the pandemic.
IWG, a rival to WeWork, said the recovery was being led by the US despite the Americas, the company’s biggest region, being the hardest hit in revenue terms, down almost a quarter in the first half.
Europe, the Middle East and Africa was the strongest performing region, with revenues down just 2.5% year on year. UK revenues were 18.5% lower.
“Since the announcement of easing restrictions in March, demand for more distributed working has increased sales in many of the satellite towns and cities outside of London, and more recently also in CBD (central business district) London,” the company said.
“Inquiries are good and sales conversion is improving. Retention is improving and is now at its highest level since the start of the pandemic.”
In the UK, IWG said occupancy of its sites hit 67.7% of pre-pandemic levels, with demand for meeting rooms “coming back strongly” in June.
“This fundamental shift in the way people work is clearly a positive tailwind for IWG over the medium to longer term and we are seeing increasing levels of interest from enterprises wishing to transform their working practices,” Dixon said.
IWG shares rose 1.2% in early trading on Tuesday.
