Office rental company IWG on Tuesday warned of higher costs this year due to rising inflation, after posting a rise in quarterly revenue buoyed by growing demand for flexible and hybrid workspaces.

Workspace landlords like IWG are recovering gradually from the pandemic as people return to offices and businesses choose hybrid work models where employees split time between home and office.

The London-listed owner of the Regus and Spaces brands of workspaces said revenue jumped nearly 18% to 613.7 million pounds ($782 million) in the first quarter ended March 31, with occupancy nearing pre-pandemic levels.

IWG said current coronavirus lockdowns in China were hurting its business and that the return to normal conditions there had been "slower than previously hoped."

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)

(Reporting by Amna Karimi in Bengaluru; Editing by Subhranshu Sahu)