Flexible Workspace Provider Company Industrious Raises $80 Million

By Amit Chowdhry • Sep 3, 2019
  • Industrious, one of the largest premium flexible workspace providers in the U.S., recently announced it closed $80 million in Series D funding

Industrious — one of the largest premium flexible workspace providers in the U.S. — announced it has closed $80 million in Series D funding focused on strategic landlord partners.

The investors in this round include Riverwood Capital Partners, Brookfield Properties Retail, TF Cornerstone, Granite Properties, Equinox, Wells Fargo Strategic Capital, Fifth Wall Capital, and the Canada Pension Plan Investment Board. Including this round, the total raised by Industrious is $222 million.

This round of funding accelerates Industrious’s industry-first evolution to exclusively signing asset-light and low-risk landlord partnerships. And the company expects to be profitable in Q1 2020.

With landlord partnerships, Industrious manages and operates flexible workspaces, large enterprise suites, and building-wide shared amenities while providing landlords income 30% above a market lease. And the company has some of the highest margins, most consistent unit economics, and highest customer satisfaction rating in the industry:

– Highest margins – 30+% for existing leased units, 90+% for managed units

– Most consistent unit performance – 90% average occupancy for mature units, 10-month average time from launch to maturity, <1% net churn.

– Highest customer satisfaction ratings – NPS score of 74%

– Revenue per workstation – 25+% higher than the largest competitor

“Industrious is unquestionably the operating partner-of-choice for landlords, and from our end, partnering with landlords enables us to deliver the world’s most productive workplaces,” said Industrious CEO and co-founder Jamie Hodari. “We evolved to a partnership-only approach about a year and a half ago and this latest round of funding capitalizes on that, allowing us to aggressively pursue our expansion goals sustainably, efficiently, and with little risk. Evolving to management contracts has not been easy. It took the hotel industry 30 years to graduate from leases, and you have to have very strong, consistent economics to build the trust of landlord partners — so we’re particularly proud to be leading the industry on this front.”

Industrious secured more than 20 landlord partners to-date including Hines, EQ Office, Macerich, Jamestown LP, etc. The management contracts represent more than 80% of the deals Industrious signed in 2019. And the company predicts managed units will form the majority of its portfolio by Q1 2020.

“We are excited to continue witnessing the amazing growth of Industrious, not only in terms of customers, locations and revenue, but also in terms of the maturity and quality of the service offering,” added Riverwood Capital Partners co-founding partner and managing partner Francisco Alvarez-Demalde. “The company is helping transform the way the commercial office market works, with a growing number of enterprises choosing Industrious as their long-term outsourcing partner for high quality and flexible office solutions. At the same time, landlords are taking advantage of this opportunity by partnering with Industrious in order to provide a better offering and transform their properties.”

This round of funding will be used to expand the company’s suite of landlord services, double network size, both organically and through M&A opportunities, and support international expansion.

“TF Cornerstone was excited about the opportunity to invest in Industrious primarily for two reasons. First, Industrious is among a new cadre of real estate companies pushing the traditional landlord-tenant relationship into a hybrid of service-provider and hospitality expert.  Second, Industrious’s focus on management agreements aligns its interest with that of its landlord partners while also insulating Industrious from the payments mismatch that lurks in the next downcycle. It also didn’t hurt that company’s economic performance is extremely impressive,” explained TF Cornerstone principal Jake Elghanayan.

Since Industrious’ last round of funding, the company has grown its square footage by 129% and now spans over 80 locations across more than 45 U.S. cities. And it also increased revenue 140% year-over-year and acquired two coworking companies Assemble and TechSpace.