Flex-office company Industrious will take over rival WeWork’s former headquarters at Tower 49.
Industrious inked a 10-year deal with landlord Kato International to develop and operate 240,000 square feet of space across 16 floors at 12 East 49th Street, the company announced. The passing-of-the-baton from WeWork to Industrious comes as WeWork unloads dozens of leases as part of its bankruptcy restructuring.
“I feel like this is a win-win in certain ways for everyone,” said Jamie Hodari, CEO and co-founder of Industrious. “It was clear WeWork wanted to get out of some of these very large spaces, and I understand that, but it just so happened that Industrious has been in the market to create one extra-large Industrious in New York, basically a triple-sized Industrious.”
The Tower 49 location will open to Industrious members in July. Some of the space will be designated for product development and testing new designs and concepts, such as new furniture types, subscription models, different dining options and events, Hodari said. The agreement was first reported by Bloomberg.
“Many Industriouses have focus rooms, brainstorming rooms, formal pitch conference rooms, casual seating conference rooms, memo writing spaces, dark spaces for doing computer graphics, podcast recording spaces, the list goes on and on,” Hodari said. “These larger footprint complexes give us more infrastructure to work with so we can roll out more of those different space types and see what customers take to and use, versus what they say they would use when you ask them on a survey.”
WeWork filed for Chapter 11 reorganization in November and won court approval last month to shed billions in debt and drop unprofitable leases from its office portfolio. The company closed its 300,000 square foot corporate headquarters at Tower 49 in May.
While WeWork expanded rapidly under founder Adam Neumann, Industrious grew more judiciously. The firm has a different business model from WeWork: Instead of signing traditional leases, Industrious partners with landlords in agreements similar to those between hotel operators and building owners.
Industrious is expanding at a time when WeWork is retrenching under a new owner, Santa Barbara-based software firm Yardi Systems.
But Hodari said he did not see the new agreement at Tower 49 as a symbolic transfer of power from WeWork to Industrious.
“If anything, I feel like WeWork’s gonna come out of this bankruptcy really strong, profitable, right-sized, and with good ownership,” he said. “I think both of these companies will live alongside each other for a very long time.”
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