Three new co-working spaces are planned for Alberta as IWG plc expands to serve growing demand for distributed office arrangements on the Prairies.
IWG will debut its HQ and Spaces brands in Edmonton and open an additional Regus location in Calgary during the first half of 2023. They’ll join IWG’s existing 18 locations in the province as well as two Regus locations in Saskatchewan and two in Winnipeg, giving the office space provider a total of 26 locations on the Prairies.
“Since the pandemic, we’ve seen demand for our space increase 30 per cent. And it’s not just in the traditional markets that we used to serve, but also in new markets,” Wayne Berger, CEO of Americas with IWG, said.
Prior to the pandemic, IWG operated 130 co-working locations in 50 cities across the country under the Regus and Spaces banners.
Spaces locations were typically urban and between 40,000 and 80,000 square feet, while Regus locations were smaller, suburban venues of between 18,000 and 25,000 square feet.
Today, it has 150, and plans to expand that to 250 by 2026. Smaller communities outside the major urban centres will be a primary focus, ideal for its new HQ-branded locations which offer a cost-effective operating model suited for smaller centres.
“It’s an excellent solution in the suburban markets and also tertiary markets, where traditional base and gross rents are lower,” Berger explained.
“People are able to live in non-traditional markets and be able to work for companies that would normally have hired those employees where their headquarters is,” he said. “We’re looking in the secondary markets right now because we’re seeing demand for flexible workspace.”
Berger said IWG is actively seeking locations are being sought in communities such as Red Deer, Lethbridge, Moose Jaw, Brandon and Portage la Prairie.
“We have active negotiations ongoing with building owners who own commercial, retail property in those markets and are looking to enter into a partnership agreement with IWG to open up a Regus or an HQ or a Spaces location,” he said.
Berger expects several announcements in the coming months, including in Manitoba where negotiations are far advanced.
Prairie cities such as Winnipeg, Saskatoon, Edmonton and Calgary have all seen announcements of new IWG locations this year, thanks in part to efforts to address double-digit office vacancies in the wake of the pandemic. Calgary leads the pack, ending 2022 with a vacancy rate of 32.6 per cent, according to CBRE Ltd.
“We’ve been able to move faster in markets like Calgary and Edmonton because those markets are still going through a fundamental shift,” Berger said. “Now you’re starting to see a real shift in the market amongst the investor community and the property owners. … We’re offering up a solution that meets a need.”
Current market uncertainties have also prompted many companies to pare back their office commitments, creating opportunities for IWG to provide the space as needed. Demand to date has largely been from tech and professional services firms, but the energy sector is also well represented.
Speaking in Vancouver last fall, Berger said IWG’s Calgary locations were seeing growing demand. Its location at Telus Sky in Calgary enjoys 90 per cent occupancy, on par with the best markets in North America.
This bodes well for IWG’s new location in the Deerfoot Atria business centre in northeast Calgary and Edmonton’s first Spaces location at the 28-storey Peak Tower (a redevelopment of the former Enbridge Place), both opening this summer.
South Edmonton will also be the home to IWG’s first HQ location, a deal eight years in the making.
“We’ve just struggled to find the right location on the right deal terms,” he said, but the cost-efficient HQ model fit the needs of Elm Developments, IWG’s partner on the 19,800-square-foot space on 51 Avenue Northwest that opens in May.