CBRE Grows Stake In Industrious With Another $100M

CBRE Group announced that it put another $100 million into flex-space company Industrious. The additional investment is an extension of the relationship between the two that started late in 2020.

“The investment reflects CBRE’s strong belief in Industrious’ ability to capture a growing share of the rapidly expanding market for flexible office space,” CBRE wrote. “Fifty-nine percent of U.S. occupiers say flex-space will be a “significant part” (more than 10%) of their portfolio within two years, according to CBRE’s 2022 occupier survey.”

According to CBRE, the company had previously invested $230 million into Industrious, $200 million of which happened in early 2021, the largest influx the flex-space operator had seen to that date. At the time, Industrious wrote, “this partnership will extend the scope and scale of Industrious’ offerings.” The arrangement also involved CBRE’s transfer of its own flex-space brand, Hana, with locations in the US and UK, to Industrious. CBRE also gained two board seats.

“CBRE’s new investment will enable Industrious, predominantly focused on the US today, to accelerate its international expansion and execute key strategic growth initiatives,” CBRE wrote back in 2021. That brought its share in Industrious to 35% with an additional 5% share expected from additional investment.

CBRE noted then that 86% of its occupier clients had planned to add flex space to their strategies, with 82% favoring buildings with a “flex-office component.” 

The new $100 million block is a convertible preferred-equity security.

Industrious had already been in the UK. It recently expanded international operations through two acquisitions that added about 1 million sq. ft. of current and pipeline locations in Singapore, Hong Kong, Thailand, France, Belgium, and The Netherlands.

One of the acquisitions, Singapore-based The Great Room, has been operating since 2016 as a “hospitality-led premium coworking space operator.” It offers larger allocations of space for fast-growing companies or hot-desking environments for entrepreneurs. The other acquired company is Welkin & Meraki, which also offers premium positioned flex spaces in Europe through five addresses.

As Industrious said in its May release: “The deals will allow Industrious to better capture the growing global demand for experience-driven, flexible space from occupiers of all sizes. Motivated by employee demand for greater work flexibility, companies are increasingly leveraging workplace-as-a-service platforms to best support and engage hybrid and distributed teams.”

By making such a significant investment in Industrious, CBRE has positioned itself for a growing market without having to further build out its own infrastructure and experience running Hana. It was a typical build/buy/invest question for a corporation.