Workspace profits jump as demand for flexible offices grows

Flexible office provider Workspace has continued to see an uptick in demand.

Flexible office provider Workspace has continued to see an uptick in demand, racking in trading profit after interest of £31.1m during the half year, an increase of 6.1 per cent on last year’s results.

The business, which manages four million square feet of office space across London, said net rental income also grew nine per cent to £61m during the term.

Workspace completed 583 lettings during the half year, with occupancy levels remaining largely unchanged at 88.7 per cent, down slightly 89.2 per cent last year.

However, the firm’s property valuation was decreased by 6.6 per cent to £2.5bn. EPRA net tangible assets per share declined 10.2 per cent from 31 March 2023 to 832p.

Workspace also said that the “unusually” high levels of inflation seen in the UK over the last year, combined with a slight reduction in overall occupancy, resulted in an increase of £1m in unrecovered service charge costs.

Graham Clemett, chief executive officer said:“Throughout the first half of the year, we have continued to actively manage our portfolio to meet changing customer needs.

“We have completed a wide range of smaller unit refurbishments and subdivisions, as well as making good progress on our larger projects. “

He added: “As expected, valuations are down as a result of movement in market yields. However, we have maintained a conservative level of gearing, with the continuing disposal of non-core properties further strengthening our balance sheet and we expect more over the next six months.”

The company’s loan-to-value ratio was 34 per cent at the end of the period, up slightly from last year’s reading of 33 per cent. Workspace disposed of £92.8m of assets in its first half.

The firm’s relatively strong results come as markets have been scrutinising the future of flexible working space, following the bankruptcy of Wework and a push to home working.

Earlier this month the trendy office provider, which is one of London’s biggest tenants, filed for Chapter 11 Bankruptcy as it struggled with its debt pile.

The trend of working from home following the pandemic has also put pressure on the office market as the as businesses have scaled back the amount of office space they require.

The shares opened flat in London this morning.