IWG Adding Up to 700 US Flex Office Sites
Swiss-based coworking pioneer aims to capitalize on growing demand for hybrid workspace.
Switzerland-based coworking pioneer IWG is planning to add as many as 700 new flexible-office locations to its US portfolio, which includes offices in 300 cities primarily under the Regus and Spaces brands.
In an interview with The National Observer, IWG CEO Mark Dixon said the hybrid work model that rapidly is becoming the consensus choice among businesses for post-pandemic office models “is a totally different way of working” that is “fundamentally changing the (labor market) geography of the United States.”
“It’s a very, very significant change in how corporations, large and small, want to support their (workers) and, as part of that, how they want to consume real estate,” Dixon told the Observer.
Dixon unveiled an aggressive growth plan for the company’s US flex-office footprint, saying IWG is looking to open between 500 to 700 new offices in the US in the next 12 months. Dixon said IWG will be opening offices “in smaller towns, using different brands.”
According to the IWG CEO, businesses across the US—and their workers—have had an epiphany during the pandemic about office work and the need for commuting. Companies in many cases saw productivity increase and costs go down as the workforce went remote, he explained, as most workers decided they have no use for commuting now that they’ve proven they can work remotely.
Dixon said flex office demand is booming in the suburbs and in small towns across the US. He said IWG has seen some tenants in large urban markets including NYC, Chicago, San Francisco and Atlanta downsize and replace expiring leases for office footprints that supported 200 workers with coworking space for 20.
Driven by the growth of suburban coworking demand, IWG reported 17.7% annual revenue growth in Q1 2022, with revenue totaling about $782M. This is an impressive turnaround for a flex-office player that had several of the Regus-branded office locations it owns file for Chapter 11 bankruptcy protection in 2020.
“The vast majority of our partners worked with us to find a way through the crisis,” Dixon said, in the Observer interview, noting that the handful of units that filed for protection have all emerged from the process with all debts paid.
In 1989, Dixon founded Regus, one of the first flex-office providers; in 2016, the company was renamed International Workplace Group (IWG).
Earlier this month, CBRE announced it would invest an additional $100M in flex-space company Industrious, the expansion of a $230M infusion of funding from CRBE that started flowing early in 2021, GlobeSt reported.
“This investment reflects CBRE’s strong belief in Industrious’ ability to capture a growing share of the rapidly expanding market for flexible office space,” CBRE said.
According to CBRE’s 2022 office occupier survey, 59% of US occupiers say flex-office space will be a significant part—more than 10%–of their (office) portfolio within two years.