A significant player in the Boston coworking scene, and one of WeWork’s chief rivals, announced Friday it expects to hit profitability early next year thanks to new deals with large landlords. The news came just days after WeWork’s parent company filed paperwork for its impending IPO that revealed over $1.61 billion in losses in 2018.
WeWork occupies 1.2 million square feet at 12 locations in the area, leased on a long-term basis from tower owners and subleased on a shorter-term basis to companies small and large. It has also been scouting for spaces to fit its new “Headquarters By WeWork” model.
Industrious currently has four locations in the Boston area and covers over 120,000 square feet. Coworking now makes up around 3.2 percent of the region’s office market, occupying 2.6 million square feet in Boston, Cambridge and Somerville, according to Avison Young.
The Industrious announcement came as it completed an $80 million series D funding round “focused on strategic landlord partners,” the company said. Funds from the series D funding round will be used to expand the company’s suite of landlord services, double network size organically and through M&A opportunities and support international expansion.
Through landlord partnerships, Industrious manages and operates flexible workspaces, large enterprise suites and building-wide shared amenities. In a statement, the company touted an ability to provide landlords income 30 percent above a market lease, and 90 percent occupancy for units over roughly 10 months old.
“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,” Jamie Hodari, CEO and co-founder of Industrious, said in a statement. “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 has secured over 20 landlord partners to-date including: Hines, EQ Office, Macerich and Jamestown LP. Management contracts represent more than 80 percent of the deals it has signed in 2019, it said, and the company predicts managed units will form the majority of its portfolio by Q1 2020.
Investors in the round include Riverwood Capital Partners, Brookfield Properties’ retail group, TF Cornerstone, Granite Properties, Equinox, Wells Fargo Strategic Capital, Fifth Wall Capital, and the Canada Pension Plan Investment Board. The series D brings the total raised by Industrious to $222 million.
Since its last round of funding, Industrious has grown its square footage by 129 percent, the company said, and now spans over 80 locations across more than 45 U.S. cities. It has also increased revenue 140 percent year-over-year, and acquired two coworking companies: Assemble and TechSpace.