Workspace’s Hutchings sees ‘work to do’ but stands by strategy

Flexible office operator Workspace Group is back in profit in its first set of annual results under chief executive Lawrence Hutchings, although he has warned of a “challenging” outlook. Underlying rental income for the group in the year to 31 March rose by 1.7% year-on-year to £135.5m, with net rental income down 3.2% to £122.1m. Profit before tax was £5.4m after a £192.8m loss a year earlier. The company’s property valuation was £2.36bn, down by 2.4%. “Despite the robust performance in 2024/25, our outlook is more challenging,” Hutchings said. “We have seen an increase in supply and softer demand due to macroeconomic factors. While we saw some positive signs on demand in the fourth quarter, our business model and flexible offer means that we have visibility on a stock of space coming back to us, which will further impact occupancy. That in turn will work its way through to earnings in 2025/26.” Hutchings has completed a strategic review of the company and said today that “there is no fundamental change in our strategy” but set out near-term targets including recovering occupancy and offloading “low conviction” assets. “We are leaders in a structural growth market, catering to the most exciting, innovative, creative and growing SMEs in London. We have a lot to play for inside a significant market opportunity,” he added. “We have forensically analysed the portfolio and know that where we have the right properties, with the right amenities, in the right locations we are able to deliver superior returns and income growth. Having disposed of over £100m worth of assets in the year, we will look to further recycle capital in the medium-term into our conviction assets, positioning the business to scale over the longer-term. “There is still a lot of work to do and it will take time to see the full impact, but I am confident that we have a strategy to deliver a market-leading product and experience for our customers and that we are well placed to be a growing, income-led business, with a focus on dividend growth and creating long-term, enduring value for our shareholders.”