Industrious Secures WeWork's Old 240K Sq Ft NYC HQ

Key Takeaway

• Industrious takes over WeWork's former 240,000 sq. ft. HQ at Tower 49, Midtown Manhattan, under a 10-year management contract.
• The pandemic has boosted demand for flexible office spaces, benefiting firms like Industrious as tenants seek smaller, adaptable footprints.
• Major NYC office leases in May include Bloomberg's nearly 1 million sq. ft. extension and significant deals by consulting and tech firms.

Industrious Takes Over WeWork's Former HQ

Industrious has signed a 10-year agreement to manage office space at Tower 49 in midtown Manhattan, previously occupied by WeWork Inc. This deal involves overseeing approximately 240,000 square feet across 16 floors at Kato International’s 12 E. 49th St. The move follows WeWork's recent court-approved exit from bankruptcy, which allowed the company to shed billions in debt and terminate unprofitable leases.

Industrious, which operates more than 200 locations globally, focuses on management contracts with landlords rather than traditional leases. This approach allows both the landlord and Industrious to share profits and mitigate risks. From 2019 to 2023, Industrious’s revenue has tripled, and the firm has been exploring new locations, including former WeWork sites. "We’ve probably considered about 70 takeovers of former WeWork space, and this is one of a very small number we’ve moved forward on," said Jamie Hodari, Industrious’s CEO.

The company had been searching for a large office space in New York to experiment with different products, such as event programming and modular office designs. "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 added. "It served our problem of wanting to have one mega-Industrious in New York City."

Flex Office Market Trends

The pandemic has significantly impacted office landlords worldwide, leading to lower demand for traditional office spaces. However, some coworking firms, including Industrious, have benefited from this shift. Tenants are increasingly opting for smaller office footprints that offer more flexibility. "It’s been golden years for flex office," Hodari noted. "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."

Major Office Leases in NYC

May saw several significant office leases in New York City, with the largest being nearly 1 million square feet, more than the next nine largest combined. Michael Bloomberg’s financial media company signed an 11-year extension for its nearly 1 million-square-foot lease, housing more than half of Bloomberg’s employees. The building is owned by Alexander’s, a real estate investment trust partially owned by Vornado Realty Trust. Despite the lease extension, the property’s $500 million mortgage remains in special servicing.

Other notable leases include a big consulting firm securing a new lease in Midtown, represented by a CBRE team, and a tech firm moving to a direct deal with RXR, moving away from WeWork. Additionally, a financial advisory firm inked a new sublease as Condé Nast reduced its square footage, and a law firm signed a new sublease represented by CBRE.

Street Views

• Jamie Hodari, CEO of Industrious (Bullish on the coworking industry):

  "We’ve probably considered about 70 takeovers of former WeWork space, and this is one of a very small number we’ve moved forward on."
  "We loved the building, loved the location, and the landlord and us were willing to put real money into it to upgrade the space. It served our problem of wanting to have one mega-Industrious in New York City."
  "It’s been golden years for flex office... 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."