Shared-workspace provider Industrious inks deal for downtown Cleveland location

Industrious, a fast-growing operator of flexible office spaces, plans to set up shop in downtown Cleveland this year.

The New York-based company has formed a partnership with the Kassouf family, the owners of the Tower at Erieview, to open a nearly 20,000-square-foot operation in the building. The space, a full floor of the tower, will house a mix of private offices and shared amenities.

Industrious, founded in 2013, has more than 100 locations in the United States and beyond. The company already operates two offices in Ohio — both in Columbus.

Instead of signing leases with landlords and paying market rental rates, Industrious inks partnership agreements. The company then shares revenues with property owners. That model means that both parties experience the downside,when business is slow, but they also share in the upside when most of the space is booked.

That approach, more like a hotel management agreement than a traditional office deal, helped Industrious expand over the last two years, even as some of its competitors contracted or consolidated.

The company’s footprint grew by 639,000 square feet between late 2020 and the third quarter of 2021, according to a recent report from CBRE Group Inc., a giant real estate services provider that bought a stake in Industrious last year. That figure does not include roughly 300,000 square feet that Industrious took over as part of the deal with CBRE, which had its own coworking arm.

Cleveland has been on Industrious’ watchlist for a while, said Andy Powers, a senior real estate manager overseeing growth in markets including the Midwest. The Kassoufs reached out to Industrious in 2019 and stayed in touch with the company throughout the pandemic.

“This is really the future of office,” said Elias Kassouf, vice president of Erieview Tower LLC, the family-owned company reimagining the 40-story building and adjoining Galleria.

The 1960s office tower, at East 12th Street and St. Clair Avenue, is slated to be split into thirds, with a W hotel occupying the lower floors and a mix of offices and high-end apartments upstairs. The Kassoufs confirmed this week that the apartments also will carry the W brand.

Powers said Industrious’ “bread and butter” is closed-door, private offices for teams of one to eight people. The company shies away from large open spaces with shared tables.

“We’re targeting the young, working professionals or the companies that are growing or need space,” Kassouf said. “It’s not just a hot desk.”

The Industrious workspace at Erieview is scheduled to open in December. The offices will be able to accommodate 245 members.

The company isn’t the only major coworking brand establishing a presence in the central business district. IWG just opened Spaces Cleveland in nearly 27,000 square feet at the Western Reserve Building, on West Ninth Street in the Warehouse District.

That facility, announced in 2019, includes 48 offices and three meeting rooms. A publicly traded company, IWG has a stable of flexible-workspace brands, including Regus, which already has a location at the Fifth Third Center office building on Superior Avenue.

Powers said the presence of other shared-office providers — both local and national — in Cleveland did not give Industrious pause. The company likes to see existing supply and demand.

“We’re really excited to enter a market that we haven’t been in, to enter a project that’s seeing a redevelopment,” he said. “To be part of that is super exciting for us, because we like to capture that growth, and serve that growth.”