Workspace Group PLC on Thursday said it was adapting to the changing office rental market, after a third-quarter slowdown in new lettings.
The London-based operator of flexible office rentals, including factory conversions, said market uncertainty reduced customer activity in the three months to December 31.
Workspace estimated the total value of new lettings during the period was £6.0 million, down 27% from £7.6 million the year prior. The average number of new lettings per month was about 91,versus 93 year-on-year.
‘We have continued to see higher levels of customer churn, including customers vacating larger spaces,’ the company noted. Life-for-like occupancy rates fell by 1.1% year-on-year to about 86%.
Nonetheless, Workspace maintained there was ‘robust’ demand for its core offering of smaller units. The company is subdividing larger offices, and plans to focus on pricing growth. Over the third-quarter, life-for-like rent per square foot is estimated to have risen 9.0% to £47.54 from £43.63 the year prior.
The company expects to report a like-for-like rent roll of £106.8 million for the quarter to December 31, up slightly from £108.3 the previous year.
Chief Executive Lawrence Hutchings said: ‘I’ve spent the last two months looking under the bonnet of the business and, despite the current market uncertainty, I remain confident about our potential to capture the structural growth opportunity that lies ahead.
‘The more I see our scalable platform in action, and the more customers I meet, the more I am convinced of Workspace’s enduring appeal to London’s vibrant SMEs,’ Hutchinson added.
The company noted a strong start to the fourth-quarter of 2025, which included its ‘strongest week for viewings since before the Covid pandemic.’
Workspace is progressing the disposal of two properties worth a total of £34.2 million, expected to complete by the end of March. Net debt at December was estimated at £847 million, down from £853 million year-on-year.
Also in the third-quarter, Workspace extended a £135 million loan to 2028, with the option to increase the amount to £255 million, and agreed a separate £80 million loan due 2026.
Workspace shares were down 1.0% at 445.50 pence each on Thursday morning in London.
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