London-focused office-space provider Workspace Group posted an annual loss on Thursday, hurt by a more than 3% drop in the valuation of its properties, and warned high inflation levels would impact service charge and administrative costs.
Office space providers across the globe have been battling with valuation and rental declines amid an increased shift to remote-work arrangements and macroeconomic challenges.
However, firms such as Workspace have outperformed traditional property companies, thanks to their flexible space offerings.
Tenants prefer flexible office spaces and short-term leases over traditional work locations and longer contracts during times of economic uncertainty to manage spending or delay investment decisions.
Workspace CEO Graham Clemett said the group's flexible space offerings helped it to attract a diverse range of the brightest SMEs across the capital, from outer London zones to more central locations.
The FTSE 250 firm, which mainly serves small- and medium-sized enterprises and entrepreneurs, said pre-tax loss came in at 37.5 million pounds ($47.3 million) for the year ended March 31, compared to a profit of 124 million pounds a year earlier.
Workspace, which provides unfurnished spaces to a varied client base from architects and florists to craft beer brewers and app developers, said a per-share measure that reflects the value of its buildings — EPRA net tangible assets — fell 6.2% to 9.27 pounds.
The company said it had collected to date 98% of rent due for the year, while its like-for-like occupancy was stable at 89%. ($1 = 0.7923 pounds) (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu)