Gamble: Mark Dixon says hybrid working signals a boom for shared office space
Mark Dixon is the first to admit he isn’t good at working from home. ‘I can’t do it,’ he says. ‘During the pandemic, I went stir crazy. I did exactly what you shouldn’t do – I started in the morning at six and I was still going until eight or nine at night.’
His confession shouldn’t come as a surprise, seeing as he is the founder and chief executive of IWG, one of the world’s biggest serviced office companies.
Working from home in hastily repurposed spare rooms, at kitchen tables or converted garden sheds was a necessity for all but essential workers during lockdowns.
But the debate since then has focused on whether ‘hybrid’ working, that splits the week between home and the office, is here to stay. According to Dixon, this misses the point entirely.
‘Everyone’s got it completely wrong,’ he says. ‘People go for the simplistic story. The real problem here is commuting. Most people want to work in an office, they want to socialise. But what they don’t want to do is spend two hours getting there and back every day, spending £5,000 on a train season ticket and paying for parking.’
So, what do they want then? Dixon’s gamble is that permanent hybrid working will include people in local, shared offices closer to home rather than going to headquarters in major cities five days a week.
This is still office work, he argues, even if not everyone in a firm is working in the same place as their colleagues.
Dixon launched IWG – previously known as Regus – in Brussels more than three decades ago. The serial entrepreneur left school at 16. His colourful career has included stints selling everything from sandwiches to encyclopedias.
He set up Regus after noticing people holding business meetings in coffee shops. He now presides over a FTSE 250 company with 3,335 sites in 120 countries, as well as a burgeoning services business. Clients include Microsoft, Disney and HSBC.
Dixon is currently focusing on the disgruntled commuters of the world by rolling out IWG workspaces in rural areas, provincial towns and the suburbs.
One of the most popular locations at the moment is Sutton, in South West London. In theory, the next phase of IWG’s expansion could be a boost to the Government’s much vaunted ‘levelling up’ agenda.
The company prides itself on flexibility. Customers can rent a single meeting room for a couple of hours, opt for a shared area with tables for people from different firms, or sign up for a long-term arrangement on a whole fully furbished office floor.
It has a range of brands, from the budget-friendly HQ to Spaces and Signature, offering ‘luxurious workspaces in prestigious locations’.
The business model is, in Dixon’s words, more like a streaming service than a traditional office rental.
‘Our subscription is a bit like Spotify. You buy a subscription, you get access to wherever you want to work. Just like if you buy Spotify, you get access to any type of music, or Netflix, most films.’
It is an unfortunate time to draw this comparison, just at the very moment people are cancelling these subscriptions in the cost-of-living crisis.
IWG’s first-half results showed losses narrowing to £70million – from £163million last year – and revenues rose by 22 per cent.
It opened 70 new sites and has plenty more in the pipeline, including a beachside office in Honolulu, Dixon says wistfully.
Meeting room bookings are up, but the general outlook is murkier, with Dixon only being able to muster up the phrase ‘cautiously optimistic’ in stock market statements. He is adamant that finance directors across the country are looking at ways to slash costs and are looking at IWG’s model as a result.
The City appears to disagree. Shares dived on the day of its results and are down more than 40 per cent so far this year. House broker Barclays slashed its outlook for the company and bankers at RBC said it was still a ‘jam tomorrow’ story. Experts at specialist magazine Investors Chronicle delivered the withering verdict that there are ‘no good reasons to buy this share or to hold it’.
The sticking point for many is that IWG’s business model relies on renting premises and then subletting to its customers on flexible terms.
This has the drawback of making them very susceptible to people cancelling. The model is also vulnerable to fresh Covid lockdowns, such as has happened in China this year.
There is clearly a lack of enthusiasm – at least currently – among investors for Dixon’s master plan to pepper the world with his serviced offices. His ultimate desire to have the same reach as McDonald’s with 30,000 locations at this stage seems extremely ambitious.
But he has had setbacks before – with Regus crashing when the dotcom bubble burst.
Even if he’s struggling to keep existing investors on side, he says he has found a silver lining from the pandemic and the dramatic downfall of US office space company WeWork.
Namely, he no longer has to explain IWG’s business model to potential new investors.
‘In some ways the publicity that came with WeWork is unprecedented,’ he says. ‘I don’t know who it was who said all publicity is good publicity, but they were right. It certainly shone a light on the industry.’
Warming to his theme, he adds: ‘Forget WeWork actually. Thank you, pandemic. I mean, I never thought I’d say that because it was a disastrous period for us. But it made everyone find another way [of working]. So … it has brought our industry and our company into the mainstream. You don’t have to explain it any more.’
Dixon, who has a 29 per cent stake in the business worth £290million, has more going on in his life than just IWG.
The father of five – who divorced from journalist Trudi Groves in a £28.7million settlement in 2005 – is a keen oenophile.
His wine empire includes the second-largest producer in Provence – Chateau de Berne – and three estates in the UK. Vines have been planted from Essex to Sussex in a bid to create this country’s largest wine maker.
He describes himself as a farmer and, alongside his Provencal vineyards, there is also livestock to keep him company, including a large number of goats.
‘I enjoy being with the goats, believe it or not. It’s my calmest moment,’ he says. ‘We’ve got about 450 of them, fantastic creatures. I’ve got cows as well, I quite like cows.’
There’s also a pet dog, Dylan.
‘He’s a truffle hunter. But he’s not very good at truffle hunting, he’s still young.’
Perhaps Dylan will have better luck at unearthing value than longsuffering IWG investors.