Co-Working Giant IWG Expands Despite Virus Hit
Global serviced office giant IWG has shrugged off concerns about the potential impact of coronavirus on the commercial property sector, announcing plans for 10 new locations across Australia.
The global player, which has plans to grow its network from 3,500 centres to at least 20,000 worldwide, currently has 77 co-working locations in Australia spanning 80,000 square metres.
The new centres will sit within IWG’s Regus brand, which falls under the umbrella of the global London-listed company and will be delivered in partnership with the Adams Group, which own Queensland-based convenience store and service station operator NightOwl.
“The appetite for flexible and co-working spaces was booming in Australia pre-Covid and the pandemic has only increased demand,” Adams Group chief executive Adam Adams said.
“There is a clear gap in the market for a high-quality product in Queensland and our goal is to partner with Regus, the global leader, with a strong brand, professional infrastructure and worldwide network to fulfil this need.”
The Regus brand will now look to expand into ‘second tier’ cities across Queensland, including Townsville, Cairns, Noosa, Mackay, Rockhampton, Gladstone, Bundaberg, Hervey Bay, the Sunshine Coast and Airlie Beach.
IWG head of partnership growth Mark Bhardwaj said the company’s ongoing franchise concept offered partners the opportunity to make high-yield investments while allowing IWG to expand without the use of its own capital.
IWG’s expansion plans were not enough to prevent the co-working provider from announcing a pre-tax loss of £176m (A$320m) in the six months to the end of June compared with £35.5m (A$63.3m) profit in the same period in 2019.
Despite the losses, and foot traffic across the company’s Australian portfolio falling by a third of pre-Covid-19 levels, IWG plans to push ahead with a recently-acquired £320m (A$568m) capital raise to fund its expansion drive.
With 7 million square metres across 18 major cities, flexible office space now equates to 4 per cent of total Asia-Pacific office stock, according to analysis by CBRE.
ASX-listed serviced office provider Servcorp, which has a global footprint that encompasses 145 locations in 52 cities, reported a 4.6 per cent lift in revenue to $352.9 million across the fiscal year even as its net capacity decreased.
And despite ongoing uncertainty about the company’s future, US giant WeWork recently opened its 21st location in Australia, and local start-up Workit Spaces expanded to a third site, both targeting enterprise customers.
WeWork moved into a heritage-listed corner building at 66 King St in the Sydney CBD following a $72 million restoration and upgrade.
Workit Spaces also recently secured 9,000sq m on a 15-year lease at Goodman Group’s Alexandria Industrial Estate at 39 Bourke Road, Sydney with the ability to house up to 350 small to large e-commerce businesses.
