IWG has seen sales tumble, but the serviced offices giant’s boss said there is “life after Covid” and his firm should benefit from demand for hybrid working.
IWG said 2020 has presented the toughest challenge the company has experienced since its formation 31 years ago.
The FTSE 250 firm, whose brands include Regus, said revenue dropped to £583.3 million in the third quarter from £680.3 million a year earlier. That came as scores of people continued to work from home due to lockdowns.
Over the summer a number of employees had been gradually returning to offices, however in September the government reiterated its remote working message in a move to try and tackle a rise in coronavirus cases.
The new national restrictions, announced this month, state: “To help contain the virus, everyone who can work effectively from home must do so.”
But IWG chief executive Mark Dixon pointed to some encouraging signs, including higher sales in China and Korea since lockdowns eased there.
He added that “there is life after Covid”, although he thinks it will look different for the London offices sector.
He said demand for IWG space is down around 40% in central London, but workspaces in the suburbs are popular.
Dixon predicts there will be a mix of “home and local office working, with people meeting up in central London [offices] maybe once a week”.
IWG added: “Whilst market conditions remain very challenging, the future of flexible working looks very positive. There is clear evidence of increasing interest in flexible working as companies address how their employees will work in the future, the advent of further potential pandemics and the need to preserve liquidity by limiting capital and operating expense. As a result, we are now starting to see some improvement in our sales activity. "
The firm said: “Hybrid working will gain momentum and requires flexible workspace solutions to deliver this successfully.”
The company faced some tenant scrutiny earlier this year for offering to reduce rents only if firms signed up to longer leases or repaid the amount at a later date.
Dixon said IWG has a number of its own overheads to pay, such as rents, business rates, cleaning and internet bills across its centres.
IWG today said it has supported a number of tenants with measures worth approximately £80 million so far this year, including rent deferrals.
That will rise in the fourth quarter and could increase to approximately £100 million for the full year.
The group, which has over 3000 sites across more than 120 countries, closed 66 offices during the period.
IWG leases space from landlords which it sub-lets to businesses, and it also has a franchise division, giving firms the rights to its brand names. It gets paid fees for franchise services, including tech and marketing.