IWG expecting occupancy rates to get back to pre-pandemic levels by the middle of 2022
IWG (LON:IWG), the office space provider, is expecting occupancy rates to get back to pre-pandemic levels by the middle of 2022 as demand for hybrid working models is leading the company to a recover following a challenging start to the year.
Recent jumps in Covid-19 cases across the world have given cause for concern for office property providers as authorities in the worst hit areas are encouraging people to work from home and employers to put off returning to their offices.
“We are expecting to come back to healthy levels of occupancy and recovery in price as we go through the year and expect to get back probably by mid-2022 to full power,” Chief Executive Mark Dixon said on an analysts’ call.
IWG shares were down by nearly 2% to 355.90p just after lunchtime on the back of the company’s update.
The FTSE 250 company said it had seen “unprecedented demand” for its products which are suited for a mixture of office and remote work, the new norm since the beginning of the pandemic over a year ago.
IWG, owned by Regus, confirmed its open centre revenue for the quarter ending March 31 dropped by 16.1%, although the period represented “a clear inflection point” for its business with occupancy growth restarting in March after months of decline.
The company said activity in China was ahead of pre-pandemic levels, as Southeast Asia came out of the crisis faster than other regions.
It added that the U.S. market, its largest, was also showing signs of improvement, with Texas and Florida seeing growth.
“These early signs of improvement continue to take root in many parts of the business,” IWG said.
Although IWG has identified hybrid work models and flexible spaces as inevitable in future, the company has yet to detail the financial impact of adjustments to its real estate.
“Trends in both franchise agreements and enterprise accounts are encouraging, albeit the market will want to see a more concrete delivery of larger franchise agreements over the next couple of quarters,” Davy Research analyst David Greenall said.