Flexible workspace provider Industrious has taken over rival WeWork’s former headquarters space in New York as the firm backed by property brokerage CBRE plans to open as many as 50 locations each year globally.

Industrious has signed for 240,000 square feet it plans to open in July, covering 16 floors at Tower 49 at 12 E. 49th St. between Madison and Fifth avenues in a 10-year management agreement model with landlord Kato International, Industrious said Monday in a statement. The move is symbolic of WeWork's shift to a more streamlined firm from its high-profile days in the decade after its 2010 founding as a fast-growing company that critics said spent too much on leases in an attempt to expand.

The office space will be Industrious’ largest as the New York firm, founded in 2012, typically has locations across the United States and in the United Kingdom averaging 30,000 square feet to 50,000 square feet, Industrious CEO Jamie Hodari said in an interview. Hodari said a location spanning just under 100,000 square feet at Vornado Realty Trust’s Penn 1 in Manhattan previously had been its largest.

“We’ve wanted for a while to have a mega location … to have a center of gravity,” Hodari told CoStar News, adding that Tower 49 has lots of natural light and is one of his favorites among WeWork locations he's visited. “The way people work is evolving. We want to push the envelope of new methods of build-out. … The large space enables us to try out more new things … in terms of the experiences that we are able to give to customers.”

WeWork recently rejected its lease at Tower 49 as part of the company’s moves in Chapter 11 bankruptcy to renegotiate lease terms with landlords to cut its leasing costs, an obligation the company has said presents its biggest obstacle to turning profitable. WeWork plans to exit bankruptcy protection this month after its restructuring plan was recently approved by a bankruptcy court judge and has said it hopes to turn profitable next year after it cut about $12 billion, or more than 50%, in future rent expenses.

Industrious plans to use the location to experiment with different layouts, try different types of furniture, design single-person pods, offer fully catered lunch, or play different types of music on different floors that may be more focus-oriented versus those geared more toward social interaction, Hodari said.

Tower 49 could allow the company to serve its large enterprise customers in a new way. Whereas about 100 people is the maximum team size that Industrious could typically accommodate, say, a Fortune 500 company, at its existing locations, Tower 49 would allow Industrious to serve up to 300 people for an enterprise customer, Hodari told CoStar, adding Industrious has “a very big enterprise” business.

“We’ve been wanting to experiment with some larger team spaces,” he said. “We have a lot of traditional customers [that] we had to say no [to].”

Industrious’ expansion comes as the company has been moving to management agreement models with landlords that do away with traditional leasing risks.

About 90% of Industrious’ over 200 global locations are structured as management agreements that involve some profit or revenue-sharing with landlords instead of a traditional lease, Hodari said.

The company has been profitable since the end of last year with the “vast majority” of each of its locations also in the black, he noted.

“Industrious has a proven track record of creating dynamic and productive work environments,” Kato Senior Vice President and General Manager Hisamitsu Hara said in the statement.

WeWork also has said it’s been shifting to management agreement models, as illustrated by bankruptcy filings that show some of the leases it’s keeping having been restructured that way.

Industrious has taken over 14 former WeWork locations, including two since WeWork filed for bankruptcy protection in early November, an Industrious spokesperson told CoStar News. Besides Tower 49, Industrious also recently took over the 70,593-square-foot space at 131 Finsbury Pavement in London.

That location marks its sixth and largest in the United Kingdom. In addition, the Finsbury location was structured as a management agreement, the Industrious spokesperson said.

At Tower 49, the deal would involve Industrious distributing a percentage of revenue and profit to the landlord based on performance, the spokesperson told CoStar News.

Industrious has a footprint in over 65 cities worldwide, and Hodari isn’t done yet. He said he plans to open 30 to 50 locations globally each year, with “the slight majority” of the openings in the United States as the company said its space utilization rate has returned to 85% of the pre-pandemic level. In contrast, security firm Kastle’s badge swipe data showed the office utilization rate in a 10-city index still hovers around 50% of the pre-pandemic level.

In New York, where Industrious has 24 locations, Hodari said he sees opportunities to expand in neighborhoods from SoHo to the Upper West Side.

For Industrious, “New York has the highest pricing and the highest utilization” among Industrious locations globally, he said. “Coming out of COVID, it looked like Austin, Miami or Nashville was going to eclipse New York as the highest-performing U.S. market. That’s no longer the case. [New York is] the best-performing market [for Industrious].”