(Reuters] – IWG Office Rentals has warned that higher inflation will result in increased costs for this year’s rental season after posting a quarterly increase in revenue, buoyed by growing interest and demand for flexible or hybrid workspaces.

IWG is slowly recovering from the pandemic. People return to work and hybrid models are being used by businesses.

London-listed Regus and Spaces owners of workspaces reported that revenue rose nearly 18% to 613.7 million pounds ($782 millions) during the quarter ending March 31. Occupancy is near pre-pandemic levels.

IWG stated that current Chinese coronavirus lockdowns were affecting its business, and that normal conditions have been returning to China “slower” than expected.

The Switzerland-headquartered company has about 3,500 buildings in more than 120 countries and counts 83% of Fortune 500 firms among its customers.

($1 = 0.7844 pounds)