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Highlights:
Workspace Group reports strong demand for flexible office space, completing 296 new lettings valued at £7.4 million in Q2.
Like-for-like occupancy declined by 0.7% to 87.5% due to a higher-than-usual number of larger customer vacates.
Positive pricing momentum is reflected in a 1.6% increase in like-for-like rent per square foot, reaching £47.00.
Workspace Group (LSE:WKP) has reported solid demand for its flexible office spaces during the second quarter, completing 296 new lettings with a total rental value of £7.4 million. Despite this positive performance, the company experienced a 0.7% decline in like-for-like occupancy, which dropped to 87.5%. This decrease was attributed to an unusually high number of larger customers vacating their premises.
The FTSE 250 company noted that pricing momentum remains favorable, with a 1.6% increase in like-for-like rent per square foot, bringing the figure to £47.00. However, total rent roll for the first half of the year decreased by 2.3%, amounting to £140.1 million. This decline reflects the impacts of asset disposals and customer vacating activity.
Workspace Group has made significant strides in its strategy to dispose of non-core assets, completing £29.9 million in disposals during the first half of the year and exchanging a further £26.9 million, expected to finalize in the second half. The company continues to enhance its portfolio, exemplified by the recent refurbishment and extension of Leroy House in Islington, which has delivered 58,000 square feet of new space across 101 units. This building, designed to be Workspace’s first net-zero property, has already attracted substantial interest, with 11 units either let or under offer within the initial two weeks of marketing.
Graham Clemett, the chief executive officer, highlighted that the company remains in a stable financial position, with £144 million in cash and undrawn facilities as of September 30. Pro forma loan-to-value stands at 35%, based on the March 31 valuation.
While acknowledging the drop in like-for-like occupancy due to the higher-than-normal churn, Clemett emphasized that this activity is part of the business’s regular rhythm. He expressed optimism regarding improving leasing activity in September and the potential for subdividing larger units into smaller ones to meet stronger demand and achieve higher pricing. The company plans to report its half-year results on November 22. At 0840 BST, shares in Workspace Group remained flat at 620p.
