CBRE Group CBRE recently announced a definitive agreement to acquire a leading provider of flexible workplace solutions, Industrious National Management Company, LLC. The deal is scheduled to close later this month.

In relation to the deal, CBRE will establish a new business segment known as Building Operations & Experience (BOE). This segment will integrate building operations, property management and workplace experience, enabling CBRE to provide scalable, future-ready solutions for offices, data centers, warehouses and other facilities.

In 2024, the BOE segment generated nearly $20 billion of combined revenue, including Industrious. The segment comprises CBRE's more than 7 billion square feet of worldwide property and corporate facilities management portfolio.

Details of CBRE’s Deal

Industrious stands out for its pioneering asset-light business model, which focuses on partnership agreements to create alignment with property owners. The company has experienced remarkable growth since 2021, with revenues increasing at a compound annual rate of more than 50%, while its presence has expanded to more than 200 units across over 65 cities.

CBRE has been a part of Industrious since late 2020, investing in the company through an approximately 40% equity interest and a $100 million convertible note. CBRE will acquire the remaining equity stake for approximately $400 million, reflecting an implied enterprise valuation of nearly $800 million. The deal is expected to be immediately accretive to 2025 core EBITDA and free cash flow.

This acquisition highlights CBRE’s strong conviction in Industrious’ expertise in workplace experience and operations, as well as the long-term growth prospects for the flexible workplace market.

CBRE has announced that its four business segments for 2025 will be Advisory Services, Building Operations & Experience, Project Management and Real Estate Investments. When the company reports fourth-quarter 2024 earnings, it will provide previous financial results under the new segment structure in a supplemental non-GAAP disclosure.

CBRE’s Leadership Moves

The BOE segment will be led by Industrious' CEO and co-founder, Jamie Hodari. He will also serve as CBRE’s chief commercial officer, with responsibility for marketing and branding activities across all CBRE businesses.

Vikram Kohli, COO of CBRE, received a promotion with expanded duties. He has been appointed as CEO of Advisory Services and is in charge of fostering growth for CBRE's largest business division.

Management Commentary’s

Per Bob Sulentic, chair and CEO of CBRE, “The advancements we’ve announced today support our strategy of investing in resilient businesses that benefit from secular tailwinds, creating new and differentiated products, and continually improving the capabilities of our leadership team.”

Per Hodari, “The global economy needs physical spaces to make it hum — safe and efficient logistics centers for our goods, magnetic offices for our teams and secure and resilient data centers for our information. Running these spaces with excellence requires sophistication at scale.”

CBRE: In a Nutshell

The new BOE segment will transform how buildings are operated, creating immense value for building users and owners. The move is expected to enhance CBRE’s market position by delivering scalable, end-to-end building operations solutions globally.

CBRE Group is well-poised to gain from its wide range of real estate products and services. The outsourcing business remains healthy and its pipeline is likely to remain elevated, offering it scope for growth. Strategic buyouts and technology investments are expected to drive its performance. However, persistent macroeconomic uncertainties add to the company’s woes.

Over the past six months, shares of this Zacks Rank #2 (Buy) company have rallied 28.5% compared with the industry’s upside of 4.5%.

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Other Stocks to Consider

Some other top-ranked stocks from the real estate operations industry are Cushman & Wakefield CWK and Zillow Group Class C Z, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CWK’s 2024 and 2025 earnings per share (EPS) are pinned at 92 cents and $1.21, suggesting year-over-year growth of 9.5% and 32.2%, respectively.

The Zacks Consensus Estimate for Zillow Group’s 2024 and 2025 EPS stands at $1.44 and $2.15, indicating an increase of 14.3% and 49.5%, respectively, from the year-ago reported figure.

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