CBRE Purchases Remaining Stake in Industrious at $800M Valuation

Real estate giant CBRE has announced its acquisition of the remaining shares in the co-working firm Industrious, pushing the startup's valuation beyond $800 million. Since its founding in 2013, the New York-based company has been a significant player in the shared workspace segment.

Background and Funding

Established a decade ago, Industrious attracted a total of $522 million in funding. Major investments came from notable firms like Riverwood Capital and Fifth Wall Ventures. By February 2021, the company reached a valuation of $571.4 million, following a substantial funding round. As of early 2023, the company employed 583 people.

Industrious' Unique Strategy

Unlike its one-time competitor WeWork, which sought large real estate assets, Industrious focused on collaborating with property owners. Their approach included providing comprehensive office environment enhancements rather than acquiring property, which proved to be a more sustainable model. This strategy allowed them to sidestep the financial pitfalls that plagued WeWork, which, despite its initial $47 billion valuation, filed for bankruptcy in November 2023.

Insights and Market Impact

"Industrious grew 24x during the time Riverwood was an investor," noted Francisco Alvarez-Demalde, co-founder of Riverwood Capital, highlighting the company's significant growth trajectory since their initial stake in 2016.

CBRE, having invested in Industrious since late 2020, initially held a 40% equity stake along with a $100 million convertible note. The acquisition of the residual shares at approximately $400 million leads to an enterprise valuation nearing $800 million. This move signifies CBRE's faith in the viability and future prospects of the co-working industry.

Strategic Integration and Future Plans

Following the completed acquisition, Jamie Hodari, CEO and co-founder of Industrious, is set to lead CBRE's new "Building Operations & Experience" (BOE) business unit, consolidating building operations, workplace experiences, and property management. This initiative is expected to enhance the company's core earnings and free cash flow by 2025.

"When we started this company, it was a lark. It was a fun idea at the right time. Now, joining CBRE gives us the resources to offer more," expressed Hodari in a blog post.

This acquisition reaffirms the potential of co-working spaces, demonstrating that despite challenges faced by industry leaders, innovative models can thrive and adapt to changing business environments.