April 17 (Reuters) - London-focused flexible office-space provider Workspace Group on Friday warned of a "substantial step down" in annual profit for fiscal 2027, as falling rents and rising costs,
UK's Workspace warns of 'substantial' profit drop for fiscal 2027, shares fall
Workspace's Financial Performance and Market Outlook
April 17 (Reuters) - Flexible office-space provider Workspace on Friday warned of a "substantial step down" in fiscal 2027 profits from 2026 amid falling rents and higher costs, sending its shares down nearly 15%.
Recent Financial Results
Total rent roll fell 1.4% to 127.3 million pounds ($171.93 million) in the three months to March 31, while stabilised portfolio rent per square foot dipped 0.9% to 46.31 pounds.
Impact on Property Portfolio
London-focused Workspace also expects a negative impact on the valuation of its property portfolio in the second half of fiscal 2027.
Share Price Reaction
The company's shares were down 14.1% at 320.6 pence in early trading.
Annual Performance and Market Expectations
For the fiscal year ended March 31, Workspace said trading profit after interest was seen in line with market expectations, though it did not provide details.
Business Strategy and Market Trends
The company has been under pressure in recent years as businesses delayed leasing decisions or curtailed office-space budgets amid rising hybrid working, prompting Workspace to expand its core business and focus on customer retention.
Shifting Demand for Office Space
However, with companies now increasingly asking employees to return to offices, demand for flexible and permanent spaces is likely to pick up. A Savills survey showed 85% of global flex operators expect to expand in 2026.
Leadership and Future Outlook
CEO's Statement
"As we deliberately reposition the business, there will be a step down in profitability," CEO Charlie Green said. Green took the helm in February amid pressure to improve performance and calls from activist investor Saba Capital to wind down the business.
Currency Exchange Rate
($1 = 0.7404 pounds)
Reporting Credits
(Reporting by DhanushVignesh Babu in Bengaluru; Editing by Sonia Cheema and Eileen Soreng)
