IWG to open 10 new co-working spaces with first franchise deal
Flexible office space provider IWG has signed its first Australian franchise deal and will open another 10 co-working spaces under its Regus brand, in a sign the group remains bullish about the sector despite having taken a hit from the pandemic.
The deal with the Adams Group, the owners of Queensland convenience store and service station operator NightOwl Convenience, will see the Regus brand add centres along coastal Queensland, in Townsville, Cairns, Noosa, Mackay, Rockhampton, Gladstone, Bundaberg, Hervey Bay, the Sunshine Coast and Airlie Beach. The centres will be about 1000 square metres each.
“The franchising or partnership route has been coming for a number of years. We’ve really just cemented that and started to roll that out more aggressively here in Australia,” country head for IWG in Australia Damien Sheehan told The Australian Financial Review.
Mark Bhardwaj, IWG’s head of partnership growth in Australia and New Zealand, said the model would allow IWG to grow its footprint, particularly in regional and rural areas, to more than 100 centres. It also allows the brand to expand without the use of its own capital or taking on extra risk.
IWG has taken a hit this year as a result of COVID-19, with occupancy at a country level dropping by up to 30 per cent and inquiries across all of its products halving from about 1800 a month pre-pandemic to just 900 since Melbourne went into its second lockdown.
Mr Sheehan said “the impact had been real” but the “devil was in the detail”, with regional markets such as Adelaide, Darwin and the Gold Coast still recording more than 90 per cent occupancy.
In Sydney and Melbourne there had been a drop-off in activity, mostly in the central city, because people were reluctant to get on public transport, Mr Sheehan said.
“But we’ve seen strong inquiries and people physically being in our suburban centres, so they’re happy to jump in their cars and go into those centres that are not in the core CBD.”
Mr Sheehan said IWG was particularly bullish about expanding further into “tier-two cities” such as Newcastle, Geelong, Bendigo and Orange, through the franchise model.
While the “working from home” trend had been fast-tracked as a result of the pandemic, Mr Sheehan was doubtful of a major exodus of city workers leaving the CBDs for a tree or sea change.
“I think it’s too early to tell, but what we absolutely know for sure is that no longer do companies have to try and source employees from within a 25-kilometre radius, and have them commute into a central hub … and that’s the biggest upside here.”
IWG has 77 co-working locations in Australia, including the recent additions of Spaces Riparian Plaza in Brisbane and Spaces 60 Martin Place in Sydney earlier this year.
