On Tuesday, real estate behemoth CBRE broadcasted its acquisition of Industrious, a co-working startup. Valued at approximately $800 million, CBRE had previously invested in a significant portion of Industrous.
Industrious, set with its roots in New York since 2013, raised about $522 million in fundraising from investors such as Riverwood Capital and Fifth Wall Ventures. During the announcement of a $200 million investment in February 2021, its last public valuation was reported at $571.4 million, according to PitchBook. Its workforce comprised 583 employees as of February 2023.
The new acquisition, valued at more than $800 million, presents a fascinating development, considering WeWork, an erstwhile competitor now bankrupt, was once appraised at a whopping $47 billion. Riverwood Co-founder Francisco Alvarez-Demalde claims Industrious multiplied 24x during the period with their investment.
Industrious set itself apart from WeWork with a distict business model, moving away from expensive real estate leases towards partnerships with property managers providing a plethora of services from office design to workplace services.
Despite WeWork’s tumultuous downfall and subsequent media attention, CBRE’s purchase indicates that co-working is far from being a bad business idea. CBRE has been investing in Industrious since he late 2020, holding approximately 40% equity interest and a $100 million convertible note.
Now, buying out the remaining equity stake for around $400 million, the deal reflects an “implied enterprise valuation of approximately $800 million”. The acquisition is set to close later this month.
With this acquisition, CBRE plans to launch a fresh business division, Building Operations & Experience (BOE), aiming to fuse building operations and property management with workplace experience. The company anticipates an immediate ascension of the core EBITDA and free cash flow of 2025.
Industrious Co-Founder and CEO Jamie Hodari is set to steer the new BOE unit, along with his role as CBRE’s Chief Commercial Officer.
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