Flexible office provider Workspace Group has warned of a “substantial step down” in trading profit for full-year 2026-27.
The company flagged lower starting rents, higher debt costs, the impact of disposals and an increase in operating expenses for the expected shortfall for the year to March 2027.
The update said: “We expect the decrease in rent roll and reduction in pricing over the second half of the financial year to have a negative impact on the valuation of our property portfolio.”
Workspace reported a reduction in pricing during the quarter, with overall rent per square foot down 1.3% to £41.96, while total occupancy increased by 0.6pp to 79.4% in the quarter.
It completed 384 lettings during the quarter with a rent roll of £8.2m, but total rent roll was down 1.4% to £127.3m.
The update comes amid an ongoing repositioning strategy for the business’s portfolio. In the fourth quarter, Workspace completed £38.1m of low-conviction asset sales, taking total disposals to £125.7m against the firm’s two-year target of £200m. It is in active discussions over the sale of a further £58m worth of assets.
Chief executive Charlie Green, who joined Workspace in February, said: “The opportunity moving forward is to reposition and elevate our offering so that we fully address the changing needs of our customers. In doing so, we will own the value category and be the first-choice provider of space for the start-up, SME and scale-up market.
“This will require investment in our portfolio and our scale will then give us the platform to create a significant market advantage in how we provide for our customers.”
Workspace currently manages 3.8m sq ft of sustainable workspace at 57 locations in London and the South East.
The update added: “Looking to the medium term, we are confident in the structural demand for our space and our strategy to deliver sustainable earnings growth.”
The firm’s full-year results will be published on 10 June.
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