Conversation with Philippe Jiménez, Country Manager Spain and Vice President Sales South Europe & Brazil of IWG. March 2021
Philippe Jimenez is the director for Spain and Sales VP for IWG in southern Europe. The IWG group (International Workplace Group), the Regus group until three years ago, is today one of the world’s major players in office rental and coworking spaces. In Madrid alone it has 21 workspaces under its two main brands, Regus itself and the more modern Spaces. The first Regus in Spain opened in Madrid thirty years ago at the Paseo de la Castellana, 93.
Mr Jiménez welcomes Madrid Investment Attraction at the recently inaugurated Spaces in Recoletos, an imposing building in which there appears to be life after the toughest months of the pandemic. “Madrid is important because it is the capital and financial center in Spain,” he advances. “We have purchased 65,000 square meters of land. We invest in Madrid ”.
M.I.A.: When did the IWG group enter Spain?
P.J.: We entered Spain under the Regus brand in 1991. Regus was the group’s name until it was renamed IWG. That’s where the brands hang. Regus is positioned in a specific market segment. Then we have Spaces and HQ, which is designed for budget clients, and Signature by Regus, a more premium brand, which we will launch in Madrid this year. The services and the exquisiteness with the clients are the same, but the investment is different.
M.I.A.: You have up to fifteen different brands. What is the positioning of each one?
P.J.: Spaces is the most dynamic and fashionable brand, attracting millennials and postmillenials. It is a brand in which we aim to make the work day a pleasant experience. “Have a great day at work” is its leitmotiv. Spaces has offices in emblematic buildings with a very attractive design that encourages creativity and innovation. Socializing also plays a part: people who work in different companies get together to talk, socialize and exchange ideas. We have a community manager whose job is to connect people. Then there is the learning side: we organize workshops and conferences of all kinds. And lastly, there is the entertainment part. Going to work is not just going to work, but having a nice day, learning and socializing.
Regus is a more conventional brand within the flexible space. There is not so much socialization, although there is more and more and its design changes every year, because the workspaces are related to technology and the advances are brutal. HQ is like Regus, but more affordable and second-line. Regus and Spaces are on the front lines: in city and financial centers. Signature is high-end. And Nº18, which is for the city center and financial districts, is a premium brand. We also have local brands.
The Clubhouse, which is not yet present in Spain, is a network of centers located in commercial spaces. You can have a space anywhere: a library, a hotel, an airport, a university. These are real examples. We have already opened some in shopping centers in the United States. The idea is that you can go shopping and say: I’m going to work from here. Or live near a mall and go to work there. That you do not have to move. An hour or two to get to work does not make any sense, it is a waste of time, of productivity, it causes fatigue… You can dedicate that time to work, to your family or to whatever you want.
We also have many local brands. In France we have Stop & Work, in Italy others. But the most important ones are the five I have already told you about. We want to give the customer a choice. It is not a one size fits all. You have to choose how you want to work, where and in what kind of brands. A bit like going to a hotel.
M.I.A.: The first Spaces in Madrid opened in Madrid Río in 2017. Why at that time and why did you chose that location?
P.J.: Madrid is important for us because it is the capital and financial center in Spain. It has a lot of demand. Why Madrid Rio? Two things attracted us there, that it is an emblematic building, an old nineteenth century power station. The rehabilitation costed four million and it was impressive. And secondly, that is right next to the Google Campus. They are two identical buildings, facing each other. At that time, there were five Google campuses in the world. It gave us the breeding ground we were looking for: a young and entrepreneurial group. It was a perfect choice because it was filled with startups. And not only that, Mapfre’s and Airbus’s accelerators, which occupied entire plants, were also there. These accelerators feed on startups and their talent. It worked like a charm. I would dare to say that it is the most beautiful center we have in Spain. And it is an area in full development.
M.I.A.: How do you decide to open new premises? What demand studies do you carry out in the area?
P.J.: It’s a bet. Before we commit, we study the area. We have a two-year development plan. We look at where we want to be based on business density and demand. Professional consultants help us with this. We analyze statistics a lot. We want to be in the neuralgic locations of the cities. And then it depends on the brand. The Spaces brand, which now has a lot of pull, is located where there is a high density of homes, companies and close to multinationals, startups and transport. The building has to have certain characteristics. Spaces buildings need a minimum of 3,000 meters and must have plenty of light. All these factors must be weighed up to make a decision.
I would like to make a point: we do not want to limit ourselves to Madrid and Barcelona. There is no such thing as a monopoly for talent. We have just opened a location in Alicante. We are present in Murcia, Toledo, Zaragoza, Malaga, Seville, Bilbao. We want to make work easier for people. This is going to have an impact on cities.
M.I.A.: Do you own buildings?
P.J.: No, we are not a real estate developer. We are a services company. There are owners who jump into the business, but this is not our case. We want to operate something that allows us to amortize the capital invested.
M.I.A.: Are you planning to open in a city other than Madrid within the metropolitan area?
P.J.: We already are in La Moraleja, Manoteras and Las Rozas. We are now planning our expansion outside of Madrid. The trend is to leave the city centers and go to the suburbs. Cities make it very difficult, with their high prices and high taxes. And this is not just my personal opinion, it is not our strategy, I am only pointing out what is happening: this has happened in London, which is not a city to live in but to work.
COVID has sped things up by five or ten years. COVID itself does not change anything: what changes the rules of the game is technology. Companies realize that with technology it is not necessary to live outside of Madrid and work in Madrid. And companies will want to be located close to where their employees live, to be more accessible and to lower costs. The companies will leave little by little. It is not going to happen overnight because they have to respect their contracts, this is a long-term change. Commuter cities will change, there will be more services and young people will not have to go to Madrid to work. So big cities will have to reinvent themselves.
M.I.A.: How has the pandemic affected you? What level of occupation are you at?
P.J.: The crisis has hit us hard. It has been a very important challenge. But I am optimistic and I look at the full part of the bottle. The group and the company have suffered less than others because we have capillarity. In major cities – not just Madrid, but Paris, Milan or Rome – it has affected us more. People have stayed at home and did not want to take public transport. In the peripheries and provinces, where you can move on foot and there is not much density, we have not suffered, but quite the opposite.
What have we done? Right from the start we complied with Health and Safety protocols. We help our clients with promotions so that they weather the storm. We have trained our employees in business matters, personnel management, well-being… We have invested like never before in software. Today customers can do whatever they want with their mobile phones: check invoices, make requests… In 2021 we will invest twice as much in R&D. We have launched new products. One is DYO, Design Your Own Office: we give a catalog to the client and, when they arrive at the office, it is designed as they want at no additional cost. We have a warehouse in Pinto that serves all of Spain.
Another service is membership for multinationals. We have signed a contract with Standard Chartered, a British bank, in which we give their employees access to all our centers around the world. They can go wherever they want with the app. And the employee does not pay. The company opens an account, puts money in it and we charge the company for the usage the employee makes of the service. Or we send an invoice at the end of the month.
M.I.A.: Have any companies in Spain hired this service?
P.J.: Yes, we test in specific markets first, but when we launch a product and technology we launch it worldwide.
M.I.A.: How will you remodel your premises to adapt them to this new reality?
P.J.: We adapt to the demand and not the other way around. A real life example: I went to see the real estate director of a multinational that has a space of 1,200 meters. The conversation was as follows: “Where are your people? They work from home. And this space? We have to keep it. Do you get a return from it? No, because no one is coming. And how do you see the future? People will come, they will work as a team; other people will work from home and come to the office to meet and socialize. And another part will work from flexible spaces. When does your rental contract end? At the end of the year. Well that’s it, can I help you?”
We have offered them half a floor for people who go to work because they give service to the rest. They wanted two offices, three meeting rooms, three phone booths, a cafeteria… The project manager designed it. Fifty people will come. Others will take cards and work where it suits them. Others will work from our premises with their own private office. They will save in costs more than half of what they paid before because we have adapted the space to their needs. They are not going to pay for 1,200 meters when they only use 20%.
We have examples like this every day. It is the future. The traditional office space will not disappear, but it will change. Companies will reduce private office space and increase collaborative space. People will work from home. The new normal will be to continue working a bit from home and a bit in an office to get out of the house. We already have the spaces and services available to do this.
M.I.A.: If we are going to work longer from home, does the case for more coworking come out of the crisis stronger or just the opposite?
P.J.: It is not that it is the future, but that the future is already here. The flexible workspace grew from 2009 to 2019 by almost 1,000% globally. Only in Madrid and Barcelona in 2019 160,000 square meters were rented out. There is nothing new with COVID, it only accelerates change. The change is not to bring all the people to the offices. The change is going from traditional offices, from a work model that had been in place for two centuries, to a hybrid work model.
This year we will invest 15 million in 20,000 square meters of office space. We do not have a crystal ball, we have companies that cry out for flexible workspaces. People are not going to work from home one hundred percent. They will do so as an alternative. Businesses have been caught off guard once by this, but it will not happen again. They want agility and this does not come from a traditional workspace. They will want to adapt their space to the needs of the moment. There are many multinationals and banks that already work in a hybrid way.
M.I.A.: What differences do you see between the Madrid market and that of other large capitals?
P.J.: It’s a complicated question. I see little difference in the European markets. Madrid perhaps looks like markets like London, Berlin, Amsterdam, Paris. They are very competitive markets. And then you have Milan, which works wonderfully, but where there is little competition.
Madrid is very competitive in our sector. It is a dynamic city. There are so many startups. Many business accelerators. And the concept of a flexible workspace has been around for a long time. It is a leading market. A multinational company that works in Madrid, Manchester or Milan wants the same thing: save on costs, flexibility, reduce or mitigate risks and attract talent. There was an explosion of the knowledge economy: startups start with one person and within a month there are forty workers. Growth is very important and cannot be done in a traditional workspace. Companies want flexible spaces here and in Shanghai.
M.I.A.: How is Madrid positioned to attract foreign talent and companies? Could it be a telecommuter destination?
P.J.: It is already a destination. Our positioning with respect to other companies is specific. We are present in 120 countries, in almost all African or Middle Eastern countries and on very remote islands. We have more than 3,500 centers around the world. In a pandemic, we have opened a center every day and a half. What benefit does it bring for Madrid? Any company located in Silicon Valley can come directly to Madrid with our services. And that is exactly what is happening. A salesperson that sells Shanghai sells Madrid at the same time. Because the concept, the processes, the technology and all the standards are identical. We can attract all the multinationals that want to come to Madrid. This means a lot to Madrid. They should consider us an important player in attracting foreign capital, because investors come through us. Madrid has won over many markets because of our presence there.
M.I.A.: How do you help them? Do you have any service for startups or large companies that want to open in Madrid?
P.J.: With our services. For big companies it is very easy, we have corporate contracts that have the same conditions anywhere in the world. The little ones can come here and sit down to work. They choose the center they want, go through our call center and we advise them. Then they send them to the person in charge in Madrid. When the client comes we sit down with him and we advise him. We have legal help with a law firm and its legal corner. Basic services are free. Then we have agreements with hotels, even companies that are dedicated to helping with children’s schools. We provide satellite services through third parties.
If this company is in Sydney or Melbourne we offer them to go and see one of the centres there. What they have in Sydney is identical to Madrid. We even say: stay a few days for free in Melbourne to live the experience and then come to Madrid.
M.I.A.: How can the local authorities help this type of company?
P.J.: We would like to sit down with the local authorities. The first thing I do when I go to a new city is meet with the mayor. Opening one of our centres means more companies and more work. A regular Regus center is equivalent to the creation of 128 jobs and generates revenues of more than 8 million, according to a study we have done. It is a source of wealth.
We have 65,000 square meters of land spread over the city. We invest in Madrid. We are opening this center, Recoletos, and we are going to open others in Palacio Miraflores, Castellana 81, Vía de los Poblados in Campo de las Naciones… We help put Madrid on the map.
M.I.A.: There are many players in the market. Is there room for everyone?
P.J.: Is there room for more car brands? Competition is good. There was a time when the only player was Regus. There was a big effort for people to get to know the concept on our part. Many people from outside and from within have helped to carry this service. There will be a place for those who provide good services, adapt, can invest in innovation and have capillarity. This is a very capital intensive investment. It is not that you can invest once and sit back: you must renew the centers, the furniture… It requires a constant effort and it is more complicated than one may think.