The Future of Work Spaces: How $3 Billion IWG Predicted the Hybrid Work Boom and its Plan to Double its North American Footprint

International Workplace Group (IWG), the multi-brand flexible workspace company with over 3,500 locations in 1,200 towns and cities in over 123 countries worldwide, is the one true pioneer of the serviced office business model. Since inventing the concept nearly 35 years ago, IWG has dominated the global workspace market. Now, as that market grows at an unprecedented rate following the COVID-19 pandemic and the mass transition to remote work, IWG is set to grow alongside it. The company’s ultimate goal is to surpass 10,000 locations, with the aim of adding 1,000 locations each year.

“Before the COVID-19 pandemic, the business world was already moving toward flexibility,” said Wayne Berger, IWG of Americas CEO. “The sector of flexible workspaces was growing exceptionally fast, especially in major cities. In 2019, we saw roughly 50% of the global workforce working from somewhere other than corporate headquarters for at least one day a week. We saw roughly a million inquiries a year of people reaching out to IWG looking for workspace.” 

Berger notes several reasons for this trend, both from employee and business owner perspectives. 

“People were becoming more geographically diverse and using their workspace in a more adaptive way,” he said. “Individuals could conduct their job utilizing the tools in front of them. As a result, companies were starting to examine their real estate portfolio, which is often high cost and high liability on PNL despite only being used about 50% of the time. According to Global Workplace Analytics, a typical employer can save around $11,000 yearly for every person working in the hybrid model. Progressive companies were shifting, moving a percentage of their real estate portfolio from a traditional lease model to a flexible workspace. Demand continued to outpace supply.” 

Then, the COVID-19 pandemic hit and accelerated that evolution dramatically. Today, 42% of the U.S. workforce is working remotely full-time, and the global flexible workspace market is projected to nearly double in size, from $7.97 billion to $13.03 billion, by 2025. According to JLL, by 2030, 30% of all commercial office space will represent flexible workspaces, whereas today, it is less than 4%.

“That is a dramatic increase,” said Berger. “The pandemic forced most people to work from home for two years, which has completely shifted how people want to work from now on and how companies support their employees. People want flexibility, but only 11% of employees say they want to work from home for five days a week because most people want to have some sort of social interaction. That is why flexible workspaces are the future of the global work environment, and IWG offers investors an exciting opportunity to get in now while there is still room.”

Today, IWG’s portfolio of brands matches every kind of business, work style and price point, including professional workplace brand Regus, creative workplace brand Spaces, hassle-free workplace brand HQ and luxurious workspace brand Signature. 

With over three decades of experience, IWG has fine-tuned its business model to optimize revenue and provide landlords, business investors and property management companies with an attractive opportunity. “In 2022, our momentum is picking up quickly, and we are expanding our organization to grow our footprint the right way,” said Berger. “We want to help investors build out and diversify their portfolio, allow business owners to create flexible workspaces for their employees and ensure landlords can build out their tenants and fulfill white space to drive immediate income.” 

As opposed to a traditional capital lease, landlords, building owners and institutional developers can sign a partnership agreement with IWG and invest the capital to convert the space into a flexible workspace office. From there, IWG will presell the location, staff the team, deploy the resources and place it on the world's largest network of flexible workspace sites. This provides landlords and business investors with operating income from day one, a higher return on net assets and increased flexibility, similar to how Airbnb has distributed residential real estate.

For investors, Berger says, IWG offers an exciting opportunity to enter the booming flexible workspace with the backing of a proven and supportive business model under its Regus brand. Unlike highly saturated industries like food service, with high labor costs and bad operating hours, the flexible workspace is wide open, with low-cost, simple-to-operate businesses that align with what consumers want. 

Additionally, Regus investors can be either hands-on or semi-absentee, depending on their preferences. Berger says the Regus team will not only find and build the site in as little as eight to 12 weeks after signing but also provide training and support in all business areas. IWG may activate and manage all of the operations on behalf of the business investor, providing them with the ability to generate revenue and operating income with no operational work.

“At the end of the day, when an institutional or individual investment partner is coming in, they want to invest their capital and partner with the best-in-class global provider of flexible workplaces,” said Berger. “So we work hard to provide support from day one to opening, undertaking all responsibilities of finding and building out the location. That is what they are paying for with the investment — we will come to you with a center gift wrapped and ready to go.”

Looking ahead, Berger says IWG hopes to double its North American footprint, adding 1,000 new locations a year. And following many years of continuous growth, Berger says global demand for temporary offices, meeting rooms and flexible workspaces is set to explode, and there is no better partner than IWG to take advantage of that demand.

“The world is seeing a complete renaissance of the workplace,” said Berger. “90% of employees want to work in a flexible way, 80% of companies have instated flexible arrangements, and 50% of employees say they will leave their job if they can’t work flexibly. We’ve been able to be a big part of that evolution, and we are excited to continue expanding in markets, from big cities to small towns, across North America.” 

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