citybiz+ CBRE Buys All of Industrious Amid Uptick in Office Leases, Growing Return-to-Office Mandates

CBRE, the world’s largest commercial real estate services and investment firm by revenue, is taking full control of co-working space provider Industrious by acquiring the 60% it doesn’t already own in the New York startup. The $400 million deal values Industrious, which rents office space at over 200 locations in 65 cities globally, at $800 million, CBRE said.

The Wall Street Journal, which reported the news on Tuesday before the official announcement, said Industrious has doubled its number of locations and tripled its revenue since 2020, when CBRE bought a stake in the WeWork rival. In a press release, CBRE said Industrious’ revenue has grown at a compound annual rate of more than 50 percent since 2021.

Favorable Tailwinds Seen

Industrious co-founder and CEO Jamie Hodari will assume the position of CEO of a new CBRE unit called Building Operations & Experience (BOE), and additionally serve as the commercial real estate giant’s chief commercial officer. CBRE also named Chief Operating Officer Vikram Kohli as CEO of its Advisory Services unit, the company’s largest business segment spanning leasing, capital markets and valuation activities.

“The advancements we’ve announced today support our strategy of investing in resilient businesses that benefit from secular tailwinds, creating new and differentiated products and continually improving the capabilities of our leadership team,” said CBRE Chairman and CEO Bob Sulentic.

“The global economy needs physical spaces to make it hum — safe and efficient logistics centers for our goods, magnetic offices for our teams and secure and resilient data centers for our information. Running these spaces with excellence requires sophistication at scale,” said Hodari. “I have found CBRE to be second-to-none in this respect, and I’m thrilled to be joining — not just because of how great it already is, but because of the opportunity ahead of us. I believe the new Building Operations & Experience segment will transform how buildings are operated, creating immense value for building users and owners.”

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Creative Business Model
The Journal noted that CBRE is “taking over Industrious just as more companies are ordering workers back to the office for longer periods,” and “office leasing is picking up in places such as New York City, especially in premium office towers.”

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Industrious, founded in 2012, grew in the shadow of WeWork but avoided the flameout of its higher-profile rival by making less risky choices. Hodari also employed a business model that considered co-working locations like hotels, going “beyond simply providing physical space,” as the Journal put it. Industrious “spruces up its offices with natural lighting, greenery and a variety of work settings. It even varies the type of music played in common areas at different times of the day,” the Journal said.

CBRE is seen benefiting from the growing demand for flexible working space, as well as by growing mandates by large companies for their employees to return to office.