IWG Expands in Hong Kong, Exits Russia Amidst Global Shifts

Flexible workspace giant IWG is making strategic moves on the global stage, taking over former WeWork premises in Hong Kong while simultaneously announcing its withdrawal from the Russian market. These decisions reflect the evolving landscape of the commercial real estate sector and geopolitical influences.

Key Takeaways

• IWG is capitalizing on WeWork's vacated space in Hong Kong's prime Causeway Bay district.
• The company is ceasing operations in Russia following the invasion of Ukraine.
• IWG reports a recovery in occupancy rates globally, nearing pre-pandemic levels.

IWG Steps Into WeWork's Hong Kong Footprint

IWG, the world's largest operator of serviced offices, is set to occupy a significant portion of space previously leased by its rival WeWork in Hysan Place, Causeway Bay, Hong Kong. WeWork vacated approximately 32,000 square feet across the 31st and 32nd floors of the building in April. This move by IWG, which operates brands like Regus and Spaces, comes as rents in the Causeway Bay area have seen a decline. IWG plans to launch its "Signature by Regus" brand at this location, with the first corporate client already signed to occupy 25 seats. The new center is slated to open in August.

Withdrawal from the Russian Market

In a stark contrast to its expansion in Hong Kong, IWG has confirmed its decision to close its serviced office spaces in Russia. Mark Dixon, founder and CEO of IWG, stated that the company is gradually withdrawing from the country, cutting all investment. The company currently operates nine offices in Russia, primarily serving international businesses that have been scaling back their own operations in the country. Dixon indicated that the withdrawal will occur as leases expire, emphasizing that it is the "right thing to do" given the current geopolitical climate.

Global Occupancy and Outlook

Despite the challenges in Russia, IWG is experiencing a positive trend in its global occupancy rates. Dixon reported that office occupancy has recovered to 75%, a significant increase from the pandemic lows and nearing the pre-pandemic average of 80-85%. Furthermore, pricing is reportedly on the rise, with the company no longer offering discounts to its customers. IWG is also actively supporting companies that have relocated from Ukraine, assisting them in establishing operations in countries like Poland, Romania, and Portugal.

Sources

• 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.
• Serviced office provider IWG to close workspaces in Russia, The Times.