Competitor Takes Over WeWork’s Former NYC Headquarters
Coworking firm Industrious is stepping into space previously used by rival company WeWork as its New York City headquarters.
Industrious has signed a 10-year, 240K SF agreement with landlord Kato International at Tower 49 in Midtown, Bloomberg reports. The New York City-based coworking firm, which counts CBRE as its largest backer, will manage 16 floors at 12 E. 49th St. as part of the deal.
“We look forward to working with Industrious to create a new flexible workplace experience,” Kato International Senior Vice President and General Manager Hisamitsu Hara said in a statement. “Industrious has a proven track record of creating dynamic and productive work environments, which aligns perfectly with our vision for Tower 49.”
Industrious has seen its revenues triple between 2019 and 2023, according to a release. This deal allows it to take on a space much larger than its typical location, which CEO Jamie Hodari told Bloomberg will allow it to experiment with different business initiatives.
“We loved the building, loved the location, and the landlord and us were willing to put real money into it to upgrade the space,” Hodari told the publication. “It served our problem of wanting to have one mega-Industrious in New York City.”
Some of the space in Industrious’s new location will be dedicated to testing concepts including design, modular offices and programmed event space.
The 45-story Tower 49 was built in 1986 and spans more than 600K SF. WeWork was a key anchor tenant, occupying more than 300K SF, where it hosted around 2,800 WeWork members and used it briefly as its corporate headquarters. It relocated near Union Square last month, Bisnow previously reported.
Unlike WeWork, Industrious’ business model relies on doing management deals with landlords rather than signing leases. The result is a more even risk and profit split between Industrious — into which CBRE has invested $330M — and the landlords.
Demand for coworking tenants has been a boon to landlords in the post-pandemic years, Hodari told Bloomberg. As a result, Industrious has been evaluating former WeWork spaces as the company has shed hundreds of locations before and during its bankruptcy process.
It looked at taking over roughly 70 locations, Hodari told Bloomberg, but has moved forward on only a few. Industrious Chief Operating Officer Liz Simon told Bisnow in November it has taken over more than a dozen.
“In recent years, landlords have felt more strongly that they need a flex option in their building if their building’s going to compete, so it has been easier to get management agreements done at great buildings across the country,” Hodari told Bloomberg.
The deal for the former WeWork headquarters comes as the embattled coworking giant gets set to form bankruptcy proceedings after a judge approved its plan at the end of May.
Prior to the judge’s approval, the company spent more than six months exiting locations and renegotiating leases during its Chapter 11 process, slashing its future rent payments by $12B but leaving many of its landlords in the lurch.
