IWG opened 15 new sites in France last year, with around twenty more to come this year. This growth is also noticeable around the world. Your group seems to be on a very strong growth trajectory.
Christophe Burckart - One figure alone illustrates this: IWG began 2023 with a network of 3,500 sites worldwide, and at the same time signed up 867 new locations. Where it took IWG 30 years to reach the 3,500 mark, it is now just under 1000 other projects have been added in just one year. This strong acceleration is also visible in France. We have never before opened 15 sites in a single year, and we will exceed this figure in 2024.
What are the reasons for this sudden acceleration?
Christophe Burckart - Four things, in our view. Firstly, of course, changes in usage and the development of hybrid working, giving employees the choice between their office, their home and operator networks such as ours. According to our studies, employees spend an average of 3.1 days a week at their company site, and two-thirds of them do not come to the office five days out of five. The company's policy on teleworking has become an important criterion in the choice of an employer, along with remuneration. This hybrid way of working is going from strength to strength with the "tracances" phenomenon, where a third of French people leave for their holiday destination before their holidays or stay on for a while afterwards, mixing work and holidays.
However, in this context, it seems to me that professionals are more likely to work in their country house, in an Airbnb rental or in a hotel. Are you meeting their expectations too?
Christophe Burckart - They can work at home, at the hotel, but also in our network. That's why we're seeing more and more openings. Of the 867 new projects, the vast majority involve secondary towns and even villages. Our presence in these places allows them to work in places that remain professional, with service and the opportunity to meet other people. They can have their own office, print your documents, have a coffee from the machine, hire a meeting room. You are not disturbed. In a way, people make sacrifices in terms of comfort by working in Starbucks, in a hotel lobby or even from home, compared with centres like ours.
So you too are benefiting from the growth in 'bleisure'?
Christophe Burckart - Rather than taking advantage of it, we're trying to support it by creating these platforms all over the place. It's almost a supply-side policy. By opening business centres in Maisons-Laffitte, Brest, Poitiers or Clermont-Ferrand, we are offering entrepreneurs and employees of major groups the places they need, where they need them.
The difficult times in traditional office property are undoubtedly another reason for your current growth.
Christophe Burckart - In fact, as well as new uses, the second thing that explains this dynamic is the 'perfect storm', as the English say, that is affecting the property sector. An extremely strong storm with the combination of high interest rates, loans and building permits that are harder to obtain, plus tenants in the process of reducing their office space in line with teleworking. Taken together, all these factors mean that traditional real estate is in crisis, and these players are trying to find new solutions. Flexible working is one of them, because there aren't that many tenants at the moment, especially in suburban areas.
Hence the recent launch of the Factories by Regus brand with Perial. Why did they turn to IWG?
Christophe Burckart - This real estate player needed to find a new angle to address the market, to seek out new customers other than the traditional tenants who sign conventional 6- or 9-year leases. Hence the coworking and flexible working offer. Instead of launching their own offer, they called on us. to create this joint brand, Factories by Regus. You know, all sectors have been revolutionised. Look at how entertainment has been changed by Netflix, where we've gone from a TV where programmes are imposed on us to a mode where we can choose to watch what we want when we want. Look at music with Deezer or Spotify, or IT with the cloud. The office property sector had not yet been revolutionised, and that's what's happening. The players understand that they need to develop more service-oriented and flexible offerings.
In practical terms, how will this Factories brand fit in with Perial's projects?
Christophe Burckart - We've come to market and operate flexible working and coworking spaces on Perial sites. On one or two floors, as in the case of the first opening recently at Le Bourget, but it could be the whole building, it depends. Our aim with Factories is to go in suburban areas by working closely with local authorities, but also to be a good corporate citizen by making these spaces available not only to our customers, but also to associations, students and city operations. All of this with strong CSR ambitions.
At the same time, you already had a similar brand, Stop&Work. Are they redundant?
Christophe Burckart - These brands are very similar, but different in their territorial approach. While Stop&Work is limited to the Paris region, Factories is set to expand throughout the country. For example, after an initial opening at Le Bourget, one of the next sites will open in the Lyon area. With Perial, we have committed to at least fifty sites. And, if the French test is positive, we may consider extending the brand to other countries, as Perial is not present only in France.
Does the fact that office buildings are harder to fill explain this association?
Christophe Burckart - There's this opportunistic approach of saying "I've got some square metres, I've got to use them". But above all it's a proactive approach. The world is changing, and it is increasingly complicated to ask companies to commit to a conventional lease at a time when the world is going through political crises, wars and economic cycles. Companies want to be much more agile in their property management, by keeping a certain number of headquarters or national and regional hubs, while at the same time entrusting the rest of their sites to operators like IWG, in a highly flexible mode, so that they can change the size of the space, choose the length of the commitment, use the services available, and so on.
In addition to the expansion of Factories by Regus, you are planning to open around twenty new stores in France this year. Let's take a look at these projects, starting with the most emblematic of them all, Spaces Part-Dieu in Lyon.
Christophe Burckart - In June, we will be moving into the iconic To Lyon tower, just a few metres from La Part-Dieu station. After Spaces, which opened in 2019 in La Défense and remains the largest in the world, this will be the second Spaces site in France, with its 10,000 m². It's a space where we've been able to push the service envelope as far as possible. With, as traditionally, private offices, open spaces and coworking, but also an auditorium and an events area, an ERP site for training institutes or schools. At the same time, we have created a range of made-to-measure offices, for companies that want to take a flat or half-flat and really feel at home, with layouts based on their specifications.
Will there also be synergies between Spaces and the Pullman hotel, also housed in the tower?
Christophe Burckart - Yes, certainly. We're used to working with hotels that are close to our centres. We can imagine that people who come for training will arrive at the station, stay at the Pullman and end up on our ERP floor. We will also be working with the Pullman on training and meeting rooms. Hotels often have large rooms, and we offer all sizes. They will be able to send us customers who are looking for slightly smaller meeting rooms, and vice versa.
With this opening, IWG completes the Spaces network in France's major cities. How do your various brands contribute to your development?
Christophe Burckart - With these large Spaces centres, we will be covering virtually all the major French conurbations: Paris, Lyon, but also Lille, Bordeaux, Nantes and Nice, looking forward to Montpellier next year. We are also working on projects in Toulouse and Grenoble to finalise the programme. Then, in each of these major cities, we are also developing all our other brands, HQ, Regus and SignatureWe're also looking at a number of other options, to offer different concepts, with a different price range. As far as secondary or suburban towns are concerned, depending on the building and the level of service, we can choose between Regus and HQ, Regus being more upmarket than HQ. Among the next cities on the programme for 2024, following openings in Brest, Douai and Carquefou last year, we will be offering new sites in Annemasse, Roubaix and Dax, for example. All of this is in addition to the Factories by Regus expected to open at Perial sites.
You mentioned the possibility of having up to 1,000 sites in France. Is this still your objective?
Christophe Burckart - That's still the minimum potential. Between sites already open and signed, we have almost 160 centres. Added to this is a development plan over the next five years of 463 sites. We will quickly reach the 600 mark. If you take all the operators together, we only represent a small share of the commercial property market, still below 5%. Which leaves considerable scope for development. 1,000 sites one day, but why not 1,500 afterwards - anything's possible.
We see certain players such as Worklib offer platforms for marketing flexible working spaces. Is it in your interest to take part in this type of solution when you have your own offer?
Christophe Burckart - No, as long as there is no international platform offering a larger network than ours, we have no interest in using these platforms. IWG covers 120 countries, all the major cities in the world, and now secondary cities and even smaller ones. We continue to add new countries, most recently Kosovo, and our network should continue to grow if we continue to sign 800 to 1000 sites a year. Just as customers at one centre have free access to shared spaces at all the other sites around the world, there's no point in going to the equivalent of Booking or Airbnb workspaces because we already have a very broad offering. Our value proposition is clearly unbeatable. This is in addition to our Membership programme, which gives access to all 4,000 IWG network centres worldwide on a 'pay as you use' basis. This means that companies can be billed for the time spent by cardholders in the centres. It's highly innovative, and we're going to continue working on it so that it can be rolled out on an even wider scale.
