Workspace Group swings to loss as customers downsize due to virus crisis – ET RealEstate

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BENGALURU: Workspace Group on Wednesday swung to a first-half loss and pushed back a decision on full-year dividend as the office space provider struggled with a rise in customers vacating and downsizing due to the coronavirus crisis.

Work-from-home policies and the economic fallout from the pandemic have hurt margins for office space providers such as WeWork, IWG and Workspace as costs surge and customers default on rent payments.

“There is no doubt that people’s expectations of the office are changing. Although this trend has been apparent to us for several years, the pandemic has accelerated fundamental changes to the role and requirements of the office for an increasing number of businesses and their employees,” the company said in a statement.

Chief Executive Graham Clemett said the company would see further pressure from virus-related curbs on occupancy and pricing in the near term, impacting its full-year performance.

Workspace had offered most of its customers a 50% rent discount in the first quarter.

The company, which owns and manages 4 million square feet of business space in London, posted a pretax loss of 110.4 million pounds ($146.58 million) for the six months ended Sept. 30, compared with a profit of 99.1 million pounds a year earlier.

Still, it said customer enquiries for work spaces were at 935 in September, an improvement from the 272 seen in April, as restrictions eased. Rent collections also picked up, with 95% of rents due for the first half received as at Nov. 2.

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Flexible space market to cross 50 million sq ft by 2023: Report – ET RealEstate

NEW DELHI: Irrespective of several short-term disruptions and challenges, increased demand from large enterprises, will support the growth of the flex space market to more than 50 million sq ft by 2023, according to a recent report by JLL India.

The current market penetration of flex spaces into India’s total office stock stands at 3% which is expected to move to 4.2% by 2023.

It is anticipated that flexible space will grow by an average of around 15-20% per annum over the next three-to-four years, although this trajectory will not be linear, said the report.

According to the report, Bengaluru and Delhi-NCR together account for more than 50% of India’s flex stock followed by Hyderabad with 4.5 million sq ft and Mumbai with 4.3 million sq ft of flex office stock. Hyderabad and Pune are among the fastest-growing flex markets.

However, the availability of capital, in the current scenario, will be a challenge. Players who have embarked on aggressive growth so far will find themselves strapped for capital. In such a scenario, the market is likely to witness consolidation activity driven by larger operators with financial wherewithal acquiring smaller ones.

“While the flex-space market more than tripled in the last three years, the momentum going ahead will be relatively slower. Players are likely to tread cautiously, and the overall market is expected to expand 1.5 times from the current size,” said Dr Samantak Das, chief economist and head of research & REIS, JLL India.

Going forward, large enterprises might look at splitting up their offices to reduce commute times and dependence on public transport. However, with expected economic uncertainty, companies will be hesitant to commit large capital to real estate, said the report.

The densification trend that had emerged over the last decade will likely reverse with enterprises leaning on flexible office space to relax space density.

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