CBRE Acquires Industrious: A New Chapter in Co-Working Spaces
In an exciting development for the real estate and co-working sector, CBRE, a global real estate behemoth, announced on Tuesday its full acquisition of the co-working startup Industrious. This acquisition valued at over $800 million, marks a significant milestone for Industrious, which has been a prominent player in the realm of flexible workspaces since its inception in 2013.
The Rise of Industrious
Founded in New York, Industrious has garnered considerable investor interest over the years, raising $522 million from notable backers like Riverwood Capital and Fifth Wall Ventures. Its last publicly known valuation was $571.4 million in February 2021, when it secured a $200 million funding round, as reported by PitchBook. As of February 2023, Industrious boasted a workforce of 583 employees.
“Industrious grew 24 times during our investment period,”
– Francisco Alvarez-Demalde, Riverwood co-founder
Strategic Moves and Industry Context
The acquisition comes at a time when the co-working sector is witnessing rapid changes. Notably, WeWork—a major competitor—faced financial struggles culminating in bankruptcy in November 2023, despite being once valued at $47 billion. This context underscores the significance of CBRE’s move.
Unlike WeWork, Industrious adopted a less capital-intensive business model early on by collaborating with property managers instead of committing to extensive real estate leases. This innovative approach allowed them to provide comprehensive services ranging from lobby activation to office design.
CBRE’s Strategic Insights
CBRE has been strategically involved with Industrious since late 2020 when it acquired approximately a 40% equity interest along with a $100 million convertible note. The remainder of the equity stake is now being acquired for around $400 million.
A Vision for the Future
The completion of this acquisition will see the formation of a new business segment within CBRE called Building Operations & Experience (BOE), aimed at unifying building operations and workplace experience with property management. Jamie Hodari, CEO and co-founder of Industrious, will spearhead this new unit and take on the role of CBRE’s chief commercial officer.
“It was a fun idea at the right time… Now it’s something closer to a calling,”
– Jamie Hodari, CEO and co-founder of Industrious
Looking Ahead
- The deal is expected to close later this month.
- The transition is anticipated to enhance 2025 core EBITDA and free cash flow immediately.
- With CBRE’s resources, Industrious aims to expand its reach and enhance member experiences.
This acquisition not only signifies CBRE’s confidence in the potential of flexible workspaces but also reaffirms that co-working is here to stay as a viable business model. As Jamie Hodari articulated in his blog post on Industrious’s website, joining forces with CBRE offers an opportunity to impact the world positively and broaden horizons beyond isolation and digital confines.
