Flexible office landlord Workspace Group has warned over a “substantial” hit to profits in the year ahead as it faces rising costs and falling rents.
Shares in the FTSE 250 firm slumped 13% in morning trading on Friday as it said results for the year to March 2027 would be impacted by lower rents and occupancy rates amid wider economic uncertainty, as well as rising debt and energy costs.
Workspace said that while trading profits are set to be in line with market expectations for the past year to the end of March, it was bracing for a “substantial step down” in 2026-27 earnings.
It is cutting its dividend as a result to ensure it is fully covered by earnings for the full year, returning the cover to 1.2 times earnings.
New chief executive Charlie Green, who took on the top job in February, is looking to reposition the group as a budget office space provider for London start-ups and small businesses.
But he said this would affect results in the short term.
He said: “It will take time to deliver on our ambitions and, as we deliberately reposition the business, there will be a step down in profitability.
“To reflect this, and a disciplined approach to capital allocation, the board has also reviewed our dividend policy.”
The group also plans to invest in its portfolio as part of the strategy shift.
Mr Green 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.
“There is considerable work to be done and we can see a clear path to accelerating our strategy and, in time, delivering sustainable earnings growth.”
Workspace will also look at ramping up sales of parts of the business to help finance the changes, on top of the previously-announced £200 million disposal programme.
