- Flex-workspace firm Industrious signed its first overseas deal, taking 30,000 square feet in Singapore.
- The lease is part of a focused strategy for growth in Asia, one of the few places of the world where demand for office space has been restored.
- Jamie Hodari, Industrious’ CEO and cofounder, told Business Insider he believes the company will have more than a dozen locations in major Asian cities, such as Tokyo and Hong Kong by the end of next year.
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The flexible-workspace company Industrious has struck a deal to open its first overseas location in Singapore, part of what it says will be a focused expansion in Asia over the next year.
The company, which in recent years has grown to over 100 locations in the US, agreed to take a roughly 30,000 square foot space in the Southeast Asian city and said it would open in additional spaces both there and in other major metropolises in Asia, including Hong Kong and Tokyo.
“We will announce up to 15 new locations over the course of next year,” said Jamie Hodari, the chief executive and co-founder of the flexible-workspace firm, which has announced ambitions to go public. “We’ll be in Singapore, Hong Kong, Tokyo and a couple of other Asian markets.”
The company’s attention to Asia reflects the greater success countries there have had managing the virus crisis. Several, including China, where the pandemic began, have restored their economies as well as the normalcy of daily life even as Western nations have seen a new surge of Covid-19 cases.
“Singapore is in a very different place with regards to Covid than the US and much of Europe,” Hodari told Business Insider. “Very few companies in Asia are talking about working from home at this point.”
Demand for office space in the US has largely dried up in recent months amid the pandemic, which has prompted much of the office-using workforce to shift to working remotely. The situation has been especially daunting for flexible-workspace brands, which take on long-term office commitments and then sublease the space out flexibly to clients. That arrangement has left many vulnerable to vacancies if tenants decide to downsize their footprint amid the current tumult.
“We saw a big drop in occupancy in March and April, but it’s been climbing back steadily since then,” Hodari said, declining to give specific numbers on occupancy within the company’s portfolio. Hodari said that Industrious members, in general, have brought back about 50% of their staff, a statistic that would exceed the wider office market in cities such as New York, where many office buildings continue to have occupancy rates below 20%.
Industrious was one of the first major flexible-workspace brands to publicly embrace management contracts, in which it eschews paying a fixed rent in favor of profit-sharing arrangements with landlords. That was the structure of the deal it just signed in Singapore, Hodari said, at a newly built mixed-use property at 30 Bideford Road that was developed by SIN Capital.
The structure has protected Industrious, Hodari said, from the worst of the pandemic. He estimated that about two-thirds of its locations are leased under management contracts and that it was working to convert traditional leases it previously signed over to profit-sharing agreements.
Hodari said the company is “talking about an IPO towards the end of next year.” He wouldn’t disclose what kind of a valuation the company would potentially seek in a public offering. Industrious has previously raised $222 million from investors, with its last funding round in the summer of 2019.
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