Workspace: London office provider struggles with customer churn
Workspace’s problem with customer churn has continued to hit the London-focused firm, with occupancy in its rented offices reducing by 1.3 per cent during last quarter to 86.1 per cent.
The flexible office provider completed 273 new lettings over the last quarter, for a total rental value of £6m, it said in a trading update today, but was struggling to keep customers onboard.
“We have continued to see higher levels of customer churn, including customers vacating larger spaces,” the firm warned in the trading update.
Investors had already been concerned over the Workspace’s drifting occupancy, according to Berenberg analyst Miranda Cockburn.
Workspace’s shares are down 13 per cent over the past 12 months, with its discount to underlying assets widening to around 45 per cent and the discount to gross assets widening to almost 30 per cent.
However, the firm did highlight a good start to trading in 2025, with 531 enquiries and 337 viewings in the first half of January.
Throughout the last quarter, pricing momentum was also maintained, with like-for-like rent per square foot up 1.1 per cent to £47.54.
“Unlike most of its London-focused peers, Workspace also offers an attractive dividend yield of 6.5 per cent, growing to over seven per cent in the coming years,” noted Peel Hunt analysts James Carswell and Matthew Saperia.
“We rate newly-appointed CEO Lawrence Hutchings highly and believe capital values for Central London offices are near the bottom,” the analysts added.
Net debt at Workspace decreased by £9m in the quarter, with cash and undrawn loans sitting at £233m.
In November, the firm’s £135m loan was extended to 2028, while giving it the option to extend it by a further two years and increase the amount it can borrow to £355m. In addition, an £80m loan was agreed with a maturity of 2026, with an option to extend by two years.
Meanwhile, it continues with its major refurbishment projects of Chocolate Factory in Wood Green, due to be completed in late spring, and The Biscuit Factory in Bermondsey, which will be finished at the end of the year.
“The macroeconomic environment continued to weigh on customer activity in the third quarter. Within that environment, we are laser focused on optimising what we can control,” said Workspace CEO Hutchings.
“We are making good progress with the refurbishment and subdivision of larger spaces which have become available this year, building on the work already underway across the portfolio to meet the demand from our customers.”