Workspace Group rents continued to rise as the demand from companies for flexible workplaces continues to grow
- Workspace Group reported like-for-like rental growth growing 3.2% to £103.6m
- The real estate company kept its occupancy rate relatively stable at 89.2%
- Flexible office spaces are often preferred in difficult economic times
Workspace Group has said solid demand continued in the first quarter as companies continue to focus on flexible office arrangements.
The London-focused real estate investment trust reported that the rental roll had grown 3.2 per cent on a like-for-like basis to £103.6m for the three months ended June.
Despite increased uncertainty in the commercial real estate market, the company closed 260 new leases over the period and kept its occupancy rate relatively constant at 89.2 percent.
Short-term service Workspace Group’s latest trade update comes as figures show UK office lease lengths have fallen to lowest level ever recorded
The Covid-induced rise of hybrid working has prompted many companies to downsize their office portfolio and favor more flexible arrangements.
Workspace struggled during the early stages of lockdowns imposed by the pandemic, but has recovered well and employees have been encouraged to return to the office.
Graham Clemett, chief executive of Workspace Group, said: ‘We have made a good start to the new fiscal year, highlighting the appeal of our flexible offering, with stable like-for-like occupancy and continued improvement in pricing.
‘Our extensive property portfolio across London provides us with a rich opportunity to upgrade and reposition our buildings to meet both the changing needs of our clients and higher environmental standards.’
The company’s latest trading update comes after figures showed the duration of office leases in the UK has fallen to the lowest on record amid a pandemic-driven shift to working from home.
Average leases signed in the first three months of this year lasted just two years and ten months, according to commercial real estate platform Re-leased.
Since 2019, leases of 12 months or less have tripled and now account for about half of all leases, while long-term rentals of at least ten years have fallen by 70 percent.
In addition to remote working, the commercial property sector is impacted by successive Bank of England rate hikes and tighter energy efficiency regulations, which require costly upgrades to office buildings.
In the last financial year, Workspace slumped to a pre-tax loss of £37.5m, largely due to declining property valuations, although net rental income rose by about a third to £116.6m.
Workspace Group Shares were down 3.5 percent on Thursday morning at 477.8 pence and are down about 43 percent over the past two years.