Workspace Group has seen a “higher than usual” level of larger tenants leaving its flexible office space, and is now preparing to turn sites into smaller units more likely to attract small and medium-sized businesses.
Over the six months to 30 September, the company posted net rental income of £60.5m, down by just under 1% year-on-year, and pretax profit of £10.2m, back in the black after a near-£150m loss a year ago.
The company’s portfolio valuation of £2.4bn was down by 0.8%, or £20m, over the course of the six months. Like-for-like rent per sq ft was up 2.8% to £47, although the rent roll dropped by 1.3% to £109m. The company said this was due to “a higher than usual level of larger customers vacating in the period”.
“The majority of these have either grown with us successfully and been acquired by large corporates or are at sites where we have not wanted to offer the longer leases typically required by larger occupiers due to planned redevelopment,” the company said.
“While this churn is higher than usual, it is part of the regular rhythm of our business and, in line with our model, represents an opportunity to create value through subdividing many of these larger units into smaller units, for which we see stronger demand and achieve higher pricing.”
New chief executive Lawrence Hutchings welcomed “good customer demand and continued pricing growth”.
Hutchings, who joined as chief executive this week from Capital & Regional, said the company is positioned to “capture demand and, over the medium term, look to increase our share of London’s growing SME market”.
Send feedback to Tim Burke
Follow Estates Gazette
