Real estate giant CBRE has announced its acquisition of co-working startup Industrious, in which it already had a significant investment, at a valuation of over $800 million. This move marks a significant shift in the co-working landscape, particularly in light of the recent decline of competitor WeWork, which filed for bankruptcy in November 2023.

Founded in 2013, New York-based Industrious had 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 2021, when it announced a $200 million raise, according to PitchBook. The company had 583 employees as of February 2023.

The acquisition is notable not only for its valuation but also for the contrast it presents with the fate of WeWork, once valued at $47 billion. WeWork's spectacular downfall has been the subject of a book, a movie, and a TV series called "WeCrashed." The news suggests that the concept of co-working is not inherently flawed, but rather, the execution and business model of companies like WeWork may have been the issue.

One key difference between Industrious and WeWork lies in their business models. Industrious moved away from capital-intensive real estate leases for new locations, instead partnering with property managers to provide services such as lobby activation, office design, and workplace services. This approach allowed the company to scale more efficiently and sustainably.

CBRE had significant insight into Industrious's growth in recent years, having been an investor in the company since late 2020. The real estate giant acquired an approximately 40% equity interest and a $100 million convertible note. It is now acquiring the remaining equity stake for approximately $400 million, reflecting an implied enterprise valuation of approximately $800 million.

The deal is expected to close later this month and will create a new business segment called Building Operations & Experience (BOE) that will "unify building operations, workplace experience, and property management." CBRE 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'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 acquisition marks a significant shift in the co-working landscape, with CBRE's vast resources and Industrious's innovative approach combining to create a formidable player in the market. As the industry continues to evolve, this deal is likely to have far-reaching implications for the future of work and the role of co-working spaces in facilitating collaboration and innovation.