Occupancy dips as higher churn hits Workspace

Flexible office provider Workspace Group saw occupancy dip slightly in the second quarter of 2024 with a higher than usual churn of occupiers. The group recorded a 0.7% drop in like-for-like occupancy to 87.5%, leading to a 1.4% dip in like-for-like rent roll to £109m in the six months ended 30 September. Despite the dip in occupancy, the group said there continued to be good customer demand with 296 new lettings completed during Q2, with a total annual rental value of £7.4m. Pricing momentum was maintained, said Workspace, with like-for-like rent per sq ft up by 1.6% in the second quarter and up 2.8% in the half year to £47. The group added that it had made good progress on disposals of non-core assets, with £29.9m of sales completed in the first half and a further £26.9m exchanged and expected to complete in the second half of the year. Outgoing chief executive Graham Clemett said: “We have seen good customer demand in what is typically a quieter quarter for lettings over the summer. We saw a drop in like-for-like occupancy due to an unusually high number of customer vacations in the quarter, including a number of larger customers who have grown with us over many years. “While this churn is higher than usual, it is part of the regular rhythm of our business. Many of the larger units will be subdivided into smaller units, where we see stronger demand and achieve higher pricing. We are encouraged by the improving leasing activity we have seen in September.” He added: “We continue to recycle capital from disposals into our extensive project pipeline and have recently completed the refurbishment of Leroy House in Islington. This ongoing activity, coupled with the strong demand we see from London’s SMEs, gives us confidence in the exciting growth opportunities ahead for Workspace.” Workspace will publish its interim results on 22 November.