As the flexible office sector adjusts to the aftermath of WeWork’s bankruptcy, one of London’s largest listed players believes it has cracked the formula for future-proofing its own business.
FTSE 250 company Workspace has published half-year results that showed a strong start to the year. Net rental income was up by 9% over the six months to the end of September to £61m, with trading profit after interest (excluding capital expenditure and disposals) up by 7% to £31m. Overall, the company clocked a half-year pretax loss of £148m, owing to the fall in the value of its investment properties.
The flex group said growth was “built on the back of good customer demand” over the period, with 583 lettings completed at a total rental value of £15m. It added that the business is continuing to make “good progress” in its plans for disposals of non-core sites.
Chief financial officer Dave Benson told EG that following three years of economic and political uncertainty, like-for-like property valuations were down slightly by 5.6% – “but relative to the market are not too bad”.
“We continue to focus on what we can control, which is providing homes to London’s brightest businesses and a vibrant community across London,” said Benson, who noted that the company’s model of providing customers with “individual units” and the flexibility to grow provides it with agility that other providers may not have.
By owning its buildings and targeting SME occupiers, the company has focused on providing spaces with a “much broader use” that is not just “conventional office space” in prime locations spread broadly across London. Workspace says it has tapped into a wide customer base that is continuously growing.
“It means we’ve got much more flexibility in terms of what we do with our buildings so we can respond much more quickly to trends in the market,” said Benson, adding that unlike WeWork and operators that lease space, owning buildings means that Workspace, “from a financial position, is in a much stronger place”.
“There is a very big difference between us and WeWork in terms of what the business model is, as well as what the balance sheet looks like,” he added. “A lot of our capital expenditure is focused on asset management activities like putting up larger units where we get a customer giving us back space into small units which are in high demand from SME customers.”
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