Flexible workspace provider IWG has announced its withdrawal from the Russian market, citing the ongoing invasion of Ukraine as the reason for its decision. The company, which operates brands like Regus and Spaces, will gradually close its nine offices in Russia as leases expire. In a separate development, IWG is expanding its global footprint by taking over space previously occupied by rival WeWork in Hong Kong.
Key Takeaways
- IWG is ceasing operations in Russia due to the invasion of Ukraine.
- The company will gradually close its nine Russian offices as leases end.
- IWG is expanding its presence by taking over WeWork's former space in Hong Kong.
- IWG's global occupancy rates are recovering post-pandemic.
IWG's Withdrawal from Russia
Mark Dixon, founder and chief executive of IWG, confirmed the decision to withdraw from Russia. The company had been expanding its presence in the country but has now halted all investment. Dixon stated that the withdrawal would be gradual, dependent on lease expirations. IWG's Russian offices primarily served international companies, many of which have also scaled back their operations in the country.
Dixon expressed that closing the Russian business felt like the "right thing to do" given the "very difficult situation." He also noted that IWG is supporting companies that have relocated from Kyiv to other European countries like Poland, Romania, and Portugal.
Global Expansion and Recovery
While exiting Russia, IWG is simultaneously expanding its global network. The company has taken over a 32,000 square foot co-working space in Hysan Place, Causeway Bay, Hong Kong, which was previously occupied by WeWork. This move signifies IWG's strategy to capitalize on opportunities arising from market shifts.
IWG reported that its global occupancy numbers are showing signs of recovery. Before the pandemic, offices were typically 80-85% full, and they have now reached 75%, the highest rate since the pandemic began. Pricing has also increased, with no customers currently receiving discounts.
Market Context
The decision to leave Russia comes amidst widespread international sanctions and corporate withdrawals following the invasion of Ukraine. In Hong Kong, the flexible workspace market has seen shifts, with WeWork vacating a portion of its premises. Rents in areas like Causeway Bay have seen a decline, partly due to the economic impact of the pandemic and previous anti-government protests, creating opportunities for established players like IWG.
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The Moveandstay editorial team writes about serviced living, workspaces, and city guides across Asia-Pacific.
