Office landlord Workspace sees SMEs expanding in various London areas

An office tenant working in fashion at Workspace’s Wood Green building (Workspace)
An office tenant working in fashion at Workspace’s Wood Green building (Workspace)

Many SMEs are thriving and expanding not just in central London, but also areas such as Deptford and Wood Green, the chief executive of flexible offices company Workspace Group has said.

The FTSE 250 firm has buildings in 76 locations in London and the South East and offers flexible space that firms can fit out.

Leases are two years with a six month exit clause, something that appeals to growing small businesses.

Workspace boss Graham Clemett said the landlord has observed high demand for space at not only City and West End sites, but also in boroughs beyond zone one.

He said interest for new and bigger offices is coming from a large range of sectors, including tech, fashion, architecture and more.

Clemett told the Evening Standard: “I think this is a good bellweather of the health of the SME customer in London.”In the year to March 31 Workspace saw net rental income jump 34% to £116.6 million.

But the group fell into the red with a £37.5 million pre-tax loss compared with a £124 million profit. That was largely due to the value of the estate falling 3.2% on an underlying basis to £2.7 billion.

Stripping out the valuation change, trading profit after interest was 29% higher.

Landlords have seen changing occupier trends post-pandemic as employers seek environmentally-friendly space that can accommodate hybrid working. Some owners of older buildings are expected to have weaker demand.

Clemett said Workspace- which had a full year dividend of 25.8p per share, up 20%- will continually invest to upgrade and regenerate properties to meet the needs of customers and environmental standards.