(Bloomberg)—Hines, the real estate investment firm founded by billionaire Gerald Hines, is betting on increasing tenant demand for flexible workspaces.
The Houston-based firm -- which oversees $121 billion in assets -- is launching a new business, dubbed Hines Squared, to provide premium co-working and flexible office space in buildings it owns.
"This concept arose from our realization that customers needed something different to the long-term leases that landlords traditionally offer," Hines Innovation Officer Charlie Kuntz said in an interview. Hines Squared hopes to provide lease flexibility that accommodates a tenant’s growth or shrinkage, as well as space to expand in new regions by its clients.
"We’re excited because if we can get this right, we’ll be able to solve problems faced by a lot of companies," Kuntz said.
Hines is among the biggest landlords to jump into the business, where the rapid growth of WeWork Cos. has prompted real estate owners like Blackstone Group LP and Tishman Speyer to provide their own flexible-space offerings.
Industrious will serve as one of Hines Squared’s operating partners for these spaces, which will be called "The Square." Its first two locations are slated to open by the end of the year in 717 Texas in Houston and The Kearns Building in Salt Lake City.
"We’ve found that the deeper the integration between the landlord and the workplace provider, the happier and more productive the employees of a building’s occupants will be," Industrious’s Chief Executive Officer and co-founder, Jamie Hodari, said in an interview. For example, he said, tenants within a property can use shared meeting rooms when their own are at capacity.
New York-based Industrious provides amenities and other services alongside its co-working offerings. Last year, it raised $80 million from investors led by Riverwood Capital and Fifth Wall Ventures, the latter of which counts Hines among its investors. Industrious has existing partnerships with landlords including Blackstone’s EQ Office, Jamestown LP, and Macerich Co.
Convene, which provides flexible working, meeting and event spaces, is Hines’s other preferred operating partner. The New York-based company last year raised $152 million from investors including Brookfield Property Partners LP and RXR Realty, both of which have added the startup to their tenant rosters in buildings that they own.
Hines Squared is in the process of launching in cities including Atlanta, Boston, Denver, New York City, San Francisco and its surroundings, as well as Washington, D.C. It also intends to leverage Hines’s global footprint elsewhere in North America as well as Europe, Asia and South America.
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