IWG Exits Russia Amidst Ukraine Conflict, Expands in Hong Kong by Taking Over WeWork Space

Flexible workspace provider IWG is strategically navigating market shifts by announcing its withdrawal from Russia due to the ongoing conflict in Ukraine, while simultaneously expanding its presence in Hong Kong by taking over space previously occupied by rival WeWork. This dual approach highlights the company's adaptability in a dynamic global business environment.

Key Takeaways

• IWG is ceasing operations in Russia, citing the invasion of Ukraine as the reason for withdrawal.
• The company is taking over WeWork's former space in Hong Kong's Hysan Place, signaling expansion in the Asian market.
• IWG reports improving occupancy rates and pricing globally, indicating a recovery post-pandemic.

Russian Withdrawal

IWG, the parent company of brands like Regus and Spaces, has confirmed its decision to close its serviced office spaces in Russia. Mark Dixon, founder and chief executive of IWG, stated that the company is gradually pulling out of the country, with the withdrawal timeline dependent on lease expirations. The Russian operations primarily served international companies, many of which have also scaled back their activities in the region. Dixon emphasized that this decision felt like the "right thing to do" given the difficult circumstances. He also noted that IWG is supporting companies that have relocated from Ukraine to other European countries like Poland, Romania, and Portugal.

Hong Kong Expansion

In a contrasting move, IWG is expanding its footprint in Hong Kong by occupying a significant co-working space at Hysan Place in Causeway Bay. This space was previously vacated by its competitor, WeWork. The 32,000 square feet of space across two floors will be utilized for IWG's "Signature by Regus" brand, with the first deal already secured for 25 seats. The center is slated to open in August. This expansion comes at a time when rents in Causeway Bay have seen a decline, partly due to the economic impact of the Covid-19 pandemic and earlier anti-government protests. Agents familiar with the deal suggest IWG secured the space at a lower rate than WeWork previously paid.

Global Market Performance

Despite the challenges in Russia, IWG is experiencing positive trends in its global operations. Dixon reported that occupancy numbers are on the rise, reaching 75% occupancy, the highest rate since the beginning of the pandemic. Furthermore, pricing has also increased, with no customers currently receiving discounts. This suggests a broader recovery and growing demand for flexible workspace solutions worldwide.

Sources

• Serviced office provider IWG to close workspaces in Russia, The Times.
• Flexible workspace giant IWG takes over US rival WeWork’s abandoned office space in Hysan Place, Causeway Bay
  | South China Morning Post, South China Morning Post.