Real estate giant CBRE announced on Tuesday that it is buying the rest of startup Industrious, in which it already had a significant investment, at a valuation of more than $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 publicly known valuation was $571.4 million in February 2021, when it announced a $200 million increase, according to PitchBook. It had 583 employees as of February 2023.
The news of its $800 million valuation is particularly interesting given 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 his firm’s time as an investor in the company. Riverwood first acquired a stake in the company in September 2016.
One way Industrious differed from WeWork can be found in the company’s previous business models. Industrious had been working to move away from capital-intensive real estate leases for new locations to simply partner with property managers to provide everything from activation and lobby service to office design, site services of work, etc.
The deal suggests the concept of co-op isn’t a bad idea for a business, even if the biggest player’s spectacular 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 given that it has been an investor in the company since late 2020, acquiring a roughly 40% equity interest and a $100 million convertible.
It is now buying the remaining equity shares for about $400 million, reflecting what it described as “an implied enterprise valuation of approximately $800 million.” The deal is expected to close at the end of this month.
As part of the acquisition, CBRE said it will create a new business segment called Construction Operations and Experience (BOE) that would “unify construction operations, jobsite experience and property management.” He expects the transition to 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’ website, Hodari wrote: “When we started this company, it was a loop. It was a fun idea at the right time. Now, in a world that gravitates toward isolation and the narrow ten-inch frame of our phone screen, it’s something closer to a calling: a place where people can step out of their homes and impact the world around them, expose themselves to young people. and ideas, and be treated with kindness. That call is why Industrious is joining CBRE, the world’s largest real estate firm. We’ll have the resources to offer our members more and the ability to offer more people the opportunity to experience Industrious.”
The transaction is expected to be immediately accretive to 2025 core EBITDA and free cash flow.
