IWG Is Taking Over Flexible Workspaces Near You, And It's Looking For More
Flexible workspace provider IWG is expanding in a big way. In July, the operator signed six new deals to create new Spaces, including taking over two former WeWork spaces at 109 South Fifth St. and 401 Park Ave. S. in New York, a former Industrious location at 320 West Ohio in Chicago, and a former MakeOffices at 2001 Market St. in Philadelphia. These new locations join a host of others announced in recent weeks — and there are more deals to come, IWG Chief Investment Officer Thomas Sinclair said.
As businesses continue to return to the workplace, IWG is expanding its portfolio to capitalize on the growing trend of hybrid working — a mix of permanent offices with flexible space that will suit the working patterns that have emerged in the post-pandemic world.
“IWG is actively speaking to all types of landlords who are looking to diversify their portfolio, whether they are a REIT, investor or property company,” Sinclair said. “Where other flexible workspace brands might struggle to act fast, we can turn vacant space into profit and execute deals in a short space of time. Right now, we see a huge number of opportunities in front of us.”
The Draw Of Flexible Space
IWG already has more than 3,400 flexible workspaces in more than 1,000 locations across the globe. The operator works with a wide range of landlords, and its spaces are used by millions of people worldwide. As other coworking brands struggle to bounce back after 18 months of disruption caused by the coronavirus pandemic, IWG Vice President Network Development, Americas Michael Berretta said that IWG is ready to step in.
"Opening more flexible workspaces in cities across North America remains core to IWG's strategy, particularly as we enter a period where enterprises are increasingly looking to adopt flexible space as part of their approach to real estate post-Covid,” he said. “Given we run a multi-branded platform, we’re looking to expand in both urban centers and suburban hubs, including providing spoke locations to meet the differing needs of our diverse customer base."
Berretta said that post-pandemic particularly, more businesses are attracted to three benefits that a hybrid workspace model offers. Firstly, a cheaper real estate footprint. A study by Global Workplace Analytics found that employers could save $11K per employee each year by adopting a combination of in-office and remote working.
“Secondly, hybrid working is better for employees,” Berretta said. “It allows them to establish a better work-life balance and to have more control over their schedule. The final overriding benefit is that hybrid working is better for the environment, through reduced commuting.”
Landlords are increasingly recognizing that businesses of all sizes are looking to reduce the size of their headquarters and use flexible space. Colliers International Tri-State Region President Michael Cohen — who is also a partner in ownership group Williams Equities, which controls more than 3M SF of office and retail space in Manhattan — said that partnering with IWG was a straightforward opportunity to offer the flexibility that today’s tenants are looking for.
“IWG’s strategy matched ours — to continue to offer flexible space to our tenants on a competitive basis,” Cohen said. “We know this is what businesses today are looking for. The deal we signed will allow us to generate high returns on our property while aligning our portfolio with the current trends in the market.”
Landlords’ increasing interest in bringing flexible space into their portfolio is evidenced by IWG’s rapid expansion. In the first half of 2021, IWG signed deals with 20 new franchise partners to create more than 110 new workspaces around the globe. This is a 360% increase in the number of deals signed in the first half of 2020, highlighting not only IWG’s focus on expansion but landlords’ increased appetite for the coworking space the company provides.
For businesses looking to replace one headquarters with offices in multiple locations, flexible space offers a straightforward solution. Trademark Property Co. Managing Director and Chief Investment Officer Tommy Miller said his company was attracted to partnering with IWG by the firm’s international reach.
“One factor that attracted us to IWG’s franchise model is its proven track record across the globe,” Miller said. “We currently have eight successful IWG flexible office workplaces in our portfolio and are actively working on several more. We knew that by partnering with IWG, we would be gaining a reliable income source with a coworking offering that we know enterprises are seeking.”
IWG CEO Mark Dixon said that the firm has become a global leader by creating deal structures that work for both IWG and landlords. The provider focuses on providing a competitive offer whatever the location, which is how it has managed to expand in such a diverse range of locations in the past six months, including across the U.S., India, Malaysia and the U.K.
“Landlords are looking for ways to safeguard revenue after a substantial period of uncertainty,” he said. “They need to monetize their vacant space and diversify their portfolios to ensure they can adapt to their tenants' future needs, as well as to what enterprises are asking for today. IWG is the best partner for landlords, as we already have the experience and an expanding network of spaces that show we know how to create the spaces today's office occupiers are seeking.”
Dixon was clear in his anticipation that IWG will continue to sign deals at the same pace for the remainder of the year. The message from the firm is clear: Look out for a new IWG workspace on your street corner very soon.
This article was produced in collaboration between IWG and Studio B. Bisnow news staff was not involved in the production of this content.
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