Office space group profits fall

Earnings at International Workplace Group (IWG) slid last year after the office space company was hit by rising costs, losses from new centres and a slowdown in London.

It came as IWG said it believed the sector would benefit from more flexible working models in the near future that would help drive sales.

“All the evidence suggests that we are fast approaching a tipping point which will see the flexible workspace option, in which we are the leading global supplier, become the norm for progressive businesses worldwide as they seek flexibility, employee satisfaction and cost efficiency,” the company said.

IWG, whose brands include Regus, Open Office and Signature, unveiled a 14 per cent fall in pre-tax profit to £149.4 million in 2017.

The group said investment in new office space and associated overheads were a drag, but insisted “these are the right actions to take advantage of the market growth opportunities and we have won further new corporate account contracts as a result”.

IWG also cited a “slow” market in London, particularly in the Square Mile financial district. But revenue rose 5 per cent to £2.35 billion as it added 314 new locations, taking its global tally to 3,125 across 1,000 cities.

The company said that it planned to spend an estimated £190m on 230 offices in 2018. Earlier this year the firm was courted by Brookfield Asset Management and Canadian private equity firm Onex over a possible takeover that came to nothing.

IWG chief executive Mark Dixon said that 2017 had been “an important year” for the flexible workspace industry globally and added that he remained confident on future prospects.