CBRE Group, Inc. Acquires 35 Percent Interest in Industrious, Leading Provider of Flexible Space Solutions

Rhea-AI Summary

CBRE Group, Inc. (NYSE:CBRE) has acquired a 35% stake in Industrious, a leader in premium flexible workplace solutions, positioning CBRE as its largest shareholder. The investment, worth approximately $200 million and involving a transfer of CBRE's Hana business, will soon increase to 40%. This strategic move aims to leverage the rising demand for flexible office spaces, with 86% of CBRE's clients planning to incorporate such solutions. CBRE executives will join Industrious' Board, fostering collaboration to develop innovative flex-space products.

Positive

• CBRE becomes largest shareholder of Industrious with a 35% stake, set to rise to 40%.
• Investment expected to capitalize on increasing demand for flexible office solutions, with 86% of clients planning to use flex space.
• The merger of CBRE's Hana business with Industrious enhances market presence and operational capabilities.

Negative

• Acquisition involves significant cash expenditure of approximately $200 million, which may impact cash reserves.

CBRE Group, Inc. (NYSE:CBRE) today announced the acquisition of a 35 percent interest in Industrious, a leading provider of premium flexible workplace solutions in the U.S. CBRE is now Industrious’ largest shareholder. In addition, CBRE is expected to acquire an additional 5 percent of Industrious in the coming weeks, which would result in a 40 percent total stake.

The investment significantly increases CBRE’s participation in the flexible workplace sector and positions the company to meet rising demand from occupiers for agile space solutions — a trend that is being accelerated by the Covid-19 pandemic. Recent CBRE surveys show that 86% of its occupier clients, which include many of the world’s largest global corporations, plan to incorporate flex office space in their real estate strategies, and 82% will favor buildings that offer a flex-office component.

Under the agreement, two CBRE executives — President & CEO Bob Sulentic and Global Chief Investment Officer Emma Giamartino — will join Industrious’ Board of Directors. As part of the transaction, CBRE’s flexible-space solutions offering, Hana, will be merged into Industrious. Industrious has more than 100 locations in more than 50 U.S. cities and specializes in asset-lite flexible workplace operating models.

CBRE acquired its 35% ownership in Industrious in the form of primary and secondary shares. The consideration includes approximately $200 million in cash and the transfer of Hana.

“Our investment in Industrious is consistent with our view that flexible office space is playing an increasingly central role in companies’ occupancy strategies and aligns us with an exceptional operator and an outstanding leadership team that is executing a great strategy,” Mr. Sulentic said. “We have been building our Hana flex-space business expressly to meet the flex-space opportunity and Industrious now enables us to capitalize on it at scale with a portfolio of well-situated units in key markets.”

“Industrious is committed to being the voice that matters most in the future of work, and we share a vision with CBRE for delivering market-leading workplace experiences on a global scale,” said Jamie Hodari, Co-Founder and CEO of Industrious. “This investment grew out of a shared understanding that neither of our organizations can fulfill that vision alone. It’s a tremendous moment for Industrious to get this vote of confidence, and we look forward to expanding what we can do for our customers while keeping the same commitment to the highest customer satisfaction in the industry.”

When the transaction closes, the 10 existing Hana locations in the U.S. and U.K. will be operated by Industrious.

CBRE and Industrious will also work collaboratively to develop and bring to market new innovative solutions in the flex-space sector, offering products that will set a new standard for flexible, amenity-driven office environments. These offerings will combine Industrious’ demonstrated skills in operating market-leading flexible workplaces with CBRE’s extensive corporate occupier and investor relationships, together with broad service offerings and expertise.

CBRE’s Andrew Kupiec, who leads the Hana business, will oversee CBRE’s day-to-day relationship with Industrious once the Hana transaction is completed in the second quarter. Mr. Kupiec will also continue as the leader of CBRE’s Host employee experience platform.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services; and development services. Please visit our website at www.cbre.com. We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

About Industrious

Industrious’ private offices and suites — the highest-rated workspaces in the industry — provide the most sustainable option for companies to manage newly distributed teams for the long term. We make it easy to find an office that works for you — even if you come in just once or twice a week. Recognized as one of America’s 500 fastest-growing companies in 2020 by Inc. Magazine, Industrious offers flexible terms and locations in more than 50 U.S. markets. For more information, visit Industriousoffice.com.

Forward-Looking Statements

Certain of the statements in this release regarding the acquisition of an ownership interest in Industrious and the transfer of CBRE Hana to Industrious that do not concern purely historical data are forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and

FAQ

What is the significance of CBRE's acquisition of a stake in Industrious?

CBRE's acquisition positions it as the largest shareholder in Industrious, enhancing its role in the growing flexible office market and aligning with trends in workplace solutions.

How much did CBRE invest in Industrious?

CBRE invested approximately $200 million to acquire a 35% stake in Industrious.

What will happen to CBRE's Hana business after the acquisition?

CBRE's Hana business will be merged into Industrious, with existing locations operated by Industrious post-transaction.

What percentage ownership in Industrious is CBRE expected to achieve?

CBRE is expected to increase its ownership in Industrious to 40% in the coming weeks.

What market trends influenced CBRE's investment in Industrious?

The Covid-19 pandemic has accelerated the demand for flexible spaces, with 86% of CBRE's clients planning to integrate flex office solutions into their strategies.