Regus 'offering cut-price offices'

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The Independent on Sunday has obtained evidence that Regus, the serviced office group, is heavily discounting its rental charges in some parts of London.

Competitors say that they have heard from former tenants and staff that the company is offering significantly lower prices than last year for its offices.

Mark Dixon, the firm's chief executive, denied that rents had gone down by over half in some parts of London.

There are over 20 Regus centres in the capital, including its flagship building at One Poultry in the City, St James's Square and Berkeley Square.

The Independent on Sunday spoke to one client, in one of Regus' most prestigious locations, who said that the company had been offered a 40 per cent rent reduction.

The client, who wanted to remain anonymous, is now paying about a quarter less but has substantially more space. The tenant said negotiating a price change had been easy.

"I went [to Regus] and said, 'The place looks empty, the market rates have fallen; I need more space and want to pay less,'" said the tenant.

Mr Dixon said that pricing policies are complicated and could vary according to many factors including the period the lease covered and the size of the client's offices.

"It's definitely not ... common practice. It would have to be special circumstances; we can't operate our business like that. This would be a very, very unusual occurrence," said Mr Dixon.

He said that the revenue per occupied workstation in May was higher than in the first quarter. Last week Regus announced it would not hit expected targets of £40m profit this year, but would break even.

The company announcement said that new pricing structures would be introduced to encourage tenants to rent out Regus offices for a longer period of time. The City reacted by cutting Regus's market value by 69 per cent.