High streets will soon be buzzing, says offices boss
Tycoon behind ‘drop-in’ offices predicts a surprising revolution in Britain’s towns
AFTER a disheartening year on many fronts, it’s perhaps fitting to present a vision of the future that’s a bit more positive. Step forward Mark Dixon who has built his FTSE250 ‘drop in’ office conglomerate IWG by taking bets on how and where people work. He says this year’s abrupt change in working patterns as people stay closer to home could lift local towns and high streets, whose demise has been well documented in these pages. ‘Just when these local cities and towns seemed to be dying, Covid-19 may have come along and saved them,’ says billionaire Dixon, who has spent 31 years building the £3.3billion business from Regus and, since 2016, IWG.
Towns that used ‘to have a real buzz to them’ will buzz again, he says.
‘It’s a bit too late, of course, for some of the retailers. But the likelihood is that a lot more people are going to be working in places like Beaconsfield, Marlow or Chelmsford. Places they commute from today – or used to.
‘They will spend less of their money in, say, London, Manchester and Birmingham, and more in these sorts of towns. County towns or smaller towns – like the old days. Basically, the whole landscape of the country will change.’
Dixon is speaking over video link from his office in Monaco, which, as he points out, in years gone by would have more easily been done ‘sitting in London over a cup of coffee’. Changes were afoot before the crisis and he – and others – was preparing.
Before the pandemic, commercial property consultants JLL forecast flexible office space – the kind offered by IWG where workers can drop in and out – would grow from 5 per cent of UK office space to 30 per cent by 2030.
Dixon, 61, now predicts ‘we’ll see dramatic changes in the next two or three years’, adding that ‘there will be cobwebs,’ referring to the prospect of mothballed offices in ‘peripheral, B-grade, inconvenient’ locations that will ultimately have to be redeveloped – probably into accommodation.
He concedes: ‘ Some workers need to work together more often – marketing agencies, creative industries, architects – where people need to spark off each other. Or some regulated industries and so on.’
But he predicts massive technology advances over the next three years could even mean ‘an almost better experience working, bringing people together over screens than you would having everyone in the same office’.
More practically, he says: ‘It’s crazy you can spend two hours getting to work and back, and when you get to the office you unpack your phone and your laptop – the very things that now mean you don’t have to make that journey in the first place. But it took this massive enforced social experiment for people to really experience that there was another life possible.’
He says he accepts people complaining they’re ‘fed up with working from home’ and saying ‘I’m losing some of the interaction and the buzz that I get from a workplace’.
He says office working is here to stay – or at least what he calls ‘hybrid working’ – not least because home working drives people up the wall: ‘Small kids, dogs, cats, you know – all these interruptions.’
But going into most workplaces ‘once a week, twice a week’ and spending time at home or in serviced offices like his – across more than 3,300 locations in 1,000 towns and cities across the world – brings huge commercial savings for firms in major cities.
IWG has recently signed a contract allowing 10,000 staff at computer maker Dell to use its offices across the world and another, due to be announced imminently, with a global bank for 95,000 people.
Investors are clearly buying it. IWG’s share price has held up surprisingly well this year despite disruptions.
‘I’ve had to reinvest,’ he says. ‘We put back in £90million in a capital raising because we wanted to be as well financed as we can possibly be.’ Parts of the business have been restructured as a result which resulted in a legal battle with landlords over the scrapping of Jerseybased entity Regus Plc, which had become a special purpose vehicle.
One recent signing is a managed office in Birmingham’s Mailbox shopping and office development owned by M7 Real Estate and also being marketed as the flagship launch on a new property exchange, the IPSX.
Shareholders in the exchange
‘The whole landscape of the country will change’ ‘Technology allows you to rebalance’
include the likes of James Caan of Dragons’ Den fame.
‘It’s a drop-in place. The sort of place that people will downsize to. If you’re coming into the city, you want something that’s good quality.’
He says the time and cost of commuting means Birmingham and Manchester are less affected than London. And he says the solutions to London’s problems – aside from the best, smartest or most convenient locations – are ‘massively complicated’.
But he says the ‘big picture’ issues are the ones converging post-Covid. The environment is ‘the country’s biggest challenge today’ for example.
‘And, by the way, this Conservative Government talks a lot about rebalancing the country away from the South and into the North and all this good stuff and gets people back into local communities.
‘And look, you’ve got a wonderful thing called technology that allows you to do that.’