Co-working company Industrious has bought local operator Assemble, adding three Chicago locations amid expected consolidation in the fast-changing industry.
Industrious doubles its number of Chicago-area locations to six with the deal, and the New York-based company said it plans to continue expanding in the area.
Former Assemble locations will be rebranded to Industrious spaces, with Industrious inheriting Assemble’s short-term tenants starting Wednesday, the two companies told the Tribune.
“There’s a lot of demand for our product,” Industrious CEO Jamie Hodari said. “We’re simply trying to keep up with demand, and I think there’s a real advantage in having a broad presence in a city. We’re still actively expanding in the Chicago area organically, launching and building new units on our own.”
Terms of the transaction were not disclosed.
Assemble’s offices are at 1720 W. Division St. in Wicker Park, 1165 N. Clark St. on the Near North Side and 600 W. Jackson Blvd. near the Kennedy Expressway downtown. Those three spaces have about 42,000 square feet combined, with up to 450 members working in the spaces per day, Assemble co-founder Phil Domenico said.
Industrious already had spaces in River North, the Fulton Market district and Evanston.
The River North office, which opened at 320 W. Ohio St. in 2013, was the company’s first. Industrious now has spaces in 33 U.S. cities.
Co-working companies typically buy properties or sign long-term leases with office landlords, and then sign tenants to short-term memberships to use the spaces.
Many co-working experts believe large national and international players such as WeWork will increasingly dominate the industry, pushing out small companies that lack a national or international portfolio of properties. The largest companies provide members, which range from small startups to Fortune 500 companies, the ability to work and hold meetings anywhere they travel.
“This consolidation is going to continue to accelerate,” said Chicago office leasing broker Matt Ward, a senior managing director at real estate brokerage Newmark Knight Frank. “The game is afoot to create scale.
“The customer has spoken. They want to be able to use a space when they’re in New York or San Francisco. They also want to feel like they’re a part of something bigger, which is one of the main attributes of co-working.”
Chicago is projected to have about 2.2 million square feet of co-working space by the end of 2018, more than triple the total in 2014, according to a report from Newmark Knight Frank and Chicago Creative Space. The total is expected to grow to almost 5 million square feet by 2021.
Assemble previously ran an office in Minneapolis, which it later closed. The company’s partners decided to sell Assemble and focus on their other business, Synergy Construction Group, a real estate development and construction firm, Domenico said.
“Industrious has grown exponentially and has been really successful at it,” Domenico said. “The time came that we’re going to let Industrious take over our three successful locations and run with it.”
Industrious is looking to add locations in the area including the Loop and Lincoln Park, and the firm may also add more offices in areas where it’s experiencing strong demand, Hodari said.
Industrious also recently formed a partnership with real estate investment trust Macerich to put co-working spaces in some of its shopping malls, starting with one in Scottsdale, Ariz.