CBRE Acquires Industrious for $800M - Expanding Co-working Footprint

CBRE to Acquire Industrious in Deal Valued Over $800 Million

CBRE, a leading global real estate services firm, revealed on Tuesday its plans to fully acquire co-working space provider Industrious. This move involves purchasing the remaining shares of Industrious, in which CBRE already held a significant investment.

Industrious: A Brief Overview

Established in 2013 and headquartered in New York City, Industrious successfully secured $522 million in funding from various investors. These included Riverwood Capital and Fifth Wall Ventures.

According to PitchBook data, the company’s most recent publicly disclosed valuation stood at $571.4 million as of February 2021, following a $200 million funding round. As of February 2023, Industrious employed 583 individuals.

A Contrast to WeWork’s Recent Struggles

The acquisition, valued at over $800 million, is noteworthy when contrasted with the recent bankruptcy filing of WeWork, a major competitor. WeWork, once boasting a $47 billion valuation, filed for bankruptcy in November 2023 and subsequently emerged in the summer of 2024.

Investor Perspective on Industrious’ Growth

Francisco Alvarez-Demalde, a co-founder of Riverwood Capital, indicated that Industrious experienced a remarkable 24x growth during Riverwood’s investment period. Riverwood initially invested in the company in September 2016.

Divergent Business Strategies

Industrious distinguished itself from WeWork through its evolving business model. The company strategically shifted away from extensive, capital-intensive real estate leases. Instead, it focused on collaborations with property managers, offering services such as lobby enhancements, office design, and comprehensive workplace solutions.

The Resilience of the Co-working Model

This deal underscores the viability of the co-working concept, despite the highly publicized difficulties faced by WeWork. The story of WeWork’s downfall has been documented in a book, a film, and the television series “WeCrashed.”

CBRE’s Existing Investment

CBRE’s familiarity with Industrious’ performance stems from its existing investment since late 2020. At that time, CBRE acquired roughly 40% equity and a $100 million convertible note in the company.

Financial Details of the Acquisition

CBRE is now set to acquire the remaining equity stake for approximately $400 million. This reflects an implied enterprise valuation of around $800 million. The transaction is anticipated to be finalized later this month.

Creation of a New Business Segment

Following the acquisition, CBRE plans to establish a new business segment, Building Operations & Experience (BOE). This segment will integrate building operations, workplace experience, and property management functions.

CBRE anticipates that this transition will positively impact its 2025 core EBITDA and free cash flow.

Leadership Transition

Jamie Hodari, the CEO and co-founder of Industrious, will lead the newly formed BOE business unit. He will also assume the role of CBRE’s chief commercial officer.

Hodari’s Vision for the Future

In a post on the Industrious website, Hodari expressed his perspective on the company’s journey. He stated that Industrious began as a promising idea and has evolved into a mission to combat isolation and foster community. He believes joining CBRE will enable Industrious to expand its reach and offer enhanced services to its members.