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After 2020 loss, office rental firm IWG sees boost from changing work patterns

Mar 9, 2021

By Aby Jose Koilparambil

(Reuters) – Pandemic disruptions have lasted longer than expected for office rental firm IWG, but it still expects a “massive surge” in growth in the second half of this year as more people embrace a mix of office-based and remote working.

Shares in the UK-listed owner of the Regus brand dropped as much as 8.5% on Tuesday, after it reported an adjusted operating loss for 2020 and said closing underperforming centres was costing it 322.3 million pounds ($447.7 million).

The pandemic has caused a radical change in the office space sector as employers opt for shorter leases and more employees choose to work remotely for at least some of the time, forcing providers to adapt their businesses and properties.

IWG said it was seeing strong demand for office space suitable for such hybrid working – for example properties in suburban areas and with large meeting rooms – and that it expected that to continue.

“We anticipate a massive surge in growth when we eventually emerge from the unprecedented downturn that the COVID-19 pandemic has created,” Chief Executive Mark Dixon said in a statement.

The Switzerland-headquartered firm said it has added new high-profile clients including Nippon Telegraph and Telephone, Standard Chartered, Cisco, Salesforce, Nestle and Staples.

For much of the last year, however, work-from-home policies and the economic fallout from the pandemic have hit office space providers such as IWG, WeWork and Workspace, and IWG said it expected challenging conditions for another few months.

It reported an adjusted operating loss from continuing operations of 173.8 million pounds for 2020, compared with a profit of 136.8 million pounds a year earlier.

($1 = 0.7229 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru. Editing by Tomasz Janowski and Mark Potter)