Article updated in August 2020.
As employers and employees alike flexible working cultures, businesses are rethinking their relationship with real-estate and increasingly engaging with short-term lets. It’s a development that’s plain to see at flexible workspace provider International Workplace Group (IWG)), which despite COVID-19 recorded a revenue increase of 3.5% in the first half of 2020.
The world is shifting at an unprecedented speed, and so are our expectations and demands within the world of work. Where working from home was once a novelty, it is now for many a staple of daily life. As businesses return to market, they will seek out options that bridge the gap between home work and office life, creating a convenient and safe route back to work for employees.
With a multi-brand offering that includes Regus, SPACES and No18, a big distinction between IWG and its competitors is in its revenue model. As well as flexible workspace, IWG also offers services such as office personnel and tech support.
In an interview with The New York Times, IWG chief executive Mark Dixon outlined the importance of these services, which earn the company 28% of its revenue, by comparing it to the hospitality industry. “It’d be like having a hotel where you give all the food and drink away, and room service is free. You might have a full hotel, but you just cannot make any money,” he said.
According to Dixon, businesses (and big corporations in particular) are keen to outsource everything that they can, and it makes sense to provide for that. If there’s a way for a business to cut an expense from its balance sheet then they’ll do it, which is where IWG steps in with properties in 1,100 cities worldwide.
IWG’s sustainable flexible workspace approach stands it in good stead for businesses in the current climate, which appreciate its transparent nature as a publicly listed company on the London Stock Exchange). With shares rising 60% in 2019. Its low-risk strategy is enhanced by its focus on shorter leases and franchises in which buildings are operated under partnerships with landlords (similar to the way many hotels operate under a particular brand). This sustainable arrangement currently accounts for 10% of the buildings under management and is set to increase to 90% in time.
Big business craves stability, thinks Dixon. “Corporations want to have a very reliable partner on the other side of the table. When you are supporting your workers, and your interest is in their productivity, with no interruption, no one wants to make a mistake on such a basic thing as real estate,” he told the NYT.
But is it a sustainable business model? Recent research from Coworking resources predicts that by the end of 2024, more than 5 million people across the world will be using coworking spaces. Despite the events of 2020, the overall outlook in the Coworking market for 2021 onwards is extremely positive, as businesses increasingly look to change the way they engage with real estate, and as their employees increasingly ask to work closer to home, IWG is providing a very real solution to a very modern problem.
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