Real estate giant CBRE announced Tuesday that it is acquiring the rest of co-working startup Industrious, in which it already had a sizable investment, at a valuation of over $800 million.
Founded in 2013, New York-based Industrious raised a total of $522 million in funding from investors including Riverwood Capital and Fifth Wall Ventures. Its last known public valuation was $571.4 million in February of 2021 when it announced a $200 million raise, according to PitchBook. It had 583 employees as of February 2023.
The news of its acquisition at the $800 million-plus valuation is particularly interesting considering that competitor WeWork, once valued at $47 billion, filed for bankruptcy in November 2023.
Riverwood co-founder Francisco Alvarez-Demalde told TechCrunch that Industrious grew 24x during the time his firm was an investor in the company. Riverwood first acquired a stake in the company in September 2016.
One way that Industrious differed from WeWork can be found in the company’s earlier business models. Industrious had worked to move away from the more capital-intensive real estate leases for new locations to simply partnering with property managers to provide everything from lobby activation and service to office design, workplace services, etc.
The deal suggests that the concept of co-working isn’t a bad idea for a business, even if the biggest player’s spectacular nose-dive was the subject of a book, a movie, and a TV series called “WeCrashed.”
CBRE had insight into Industrious’s growth in recent years considering that it has been an investor in the company since late 2020, acquiring an approximately 40% equity interest and $100 million convertible note.
It is now acquiring the remaining equity stake for approximately $400 million, reflecting what it described as “an implied enterprise valuation of approximately $800 million.” The deal is expected to close later this month.
As part of the acquisition, CBRE said it will create a new business segment called Building Operations & Experience (BOE) that would “unify building operations, workplace experience and property management.” It expects that the transition will be “immediately accretive” to 2025 core EBITDA and free cash flow.
Industrious CEO and co-founder Jamie Hodari will lead the new BOE business unit as well as serve as CBRE’s chief commercial officer.
In a blog post on Industrious’s website Hodari wrote: “When we started this company, it was a lark. It was a fun idea at the right time. Now, in a world pulling us towards isolation and the narrow ten-inch frame of our phone screen, it’s something closer to a calling: a place where people can get out of their home and impact the world around them, be exposed to new people and ideas, and be treated with kindness.That calling is why Industrious is joining CBRE, the largest real estate firm in the world. We’ll have the resources to offer our members more, and the reach to offer more people the chance to experience Industrious.”
The transaction is expected to be immediately accretive to 2025 core EBITDA and free cash flow.
