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Jonathan Price – CRE & Flex Expert
Hours after London-based Workspace Group Plc released company figures showing continued positive growth in its rental income, WeWork stole back the headlines by announcing its largest global location yet… in London.
WeWork’s latest lease is a huge 280,000 sq ft space near Waterloo Station at Two Southbank Place, right behind Jubilee Gardens and the London Eye.
It’s London’s largest leasing agreement of the year so far, and adds to WeWork’s existing and soon-to-open portfolio of 19 London locations.
According to the Financial Times, Eugen Miropolski, managing director for WeWork in Europe and Israel, said the move was a “show of strength and commitment to our second-largest market”.
Workspace Group steps in, again
The news comes as FTSE 250 company Workspace Group Plc just released financial details relating to its property empire, which spans commercial lease agreements, industrial space and workshops, serviced and managed offices, and coworking.
Workspace Group reported 6.9% growth in net rental income for the full year, to £79.2m, resulting in a 15.5% rise in adjusted trading profit to £50.7m.
The company maintains a confident outlook for the sector, despite pre-tax profit sinking to £88.8m from £391.3m a year earlier. This was attributed to a slowdown in growth of capital values following the Brexit vote last year.
Jamie Hopkins, chief executive, said: “Our ability to capture the opportunities in this changing marketplace is evidenced by our strong results, with rent roll growing strongly and trading profit increasing by 15% to over £50m. This performance has supported the Board’s decision to increase the dividend by 40%.”
Shares rise on Salisbury House interest
Both stories hit the London headlines this week, and now Workspace Group has once again snatched back the limelight after confirming its interest in Salisbury House in The City, in a potential £158m deal.
According to City A.M., news of the possible deal triggered a 4% rise in Workspace Group’s shares.
However, the company played down its interest in a statement to the London Stock Exchange: “Workspace confirms that it is in discussions for the asset in question. There can be no certainty that any transaction will proceed and a further announcement will be made by Workspace if and when appropriate.”
Whether or not it acquires Salisbury House, Workspace looks set to continue its growth in London as stated by Hopkins earlier this week: “We have a strong pipeline of refurbishments and redevelopments expected to deliver more than 1m sq ft. of new and upgraded space over the next three years.”
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Competition for flexible workspace in London is intensifying, despite Brexit… or because of it?
Workspace Group was founded in 1987 and its coworking arm, Club Workspace, was set up in 2011. Whereas Club Workspace was once considered a standalone concept, it now boasts 18 London locations – and it’s clear that the company’s collaborative workspace is taking centre stage.
Workspace Group has long incorporated coworking into its business centres; indeed, in much the same way as WeWork ‘hides’ its private serviced offices behind a coworking screen, Workspace Group has been offering this same blend of collaborative and private workspace since launching in 2011.
Whilst WeWork’s continued push into London competes directly with Club Workspace – and let’s not ignore the fact that WeWork’s mammoth new Waterloo opening is mere minutes from Club Workspace’s Southbank location – Workspace Group isn’t exactly new to the property game. Despite Brexit and the UK’s ongoing political saga; despite the wave of competition from new and established flexible operators, and even from commercial real estate companies like British Land; and despite the aggressive expansion of highly funded operators in their own backyard, Workspace Group continues to report continued positive growth.
“This year, more than ever before, we have seen increasing evidence that our strategy is working,” said Hopkins in a statement released earlier this week. “Demand, from all types of businesses across London, is firmly moving towards the highly designed and super connected space let on personalised and flexible terms that Workspace offers.
“We continue to see healthy demand for our space and we have financial resources to take advantage of acquisition opportunities.”
