WeWork announced today it would buy Spacious, a startup that converts restaurants and bars in New York City into co-working spaces during the day.
WeWork paid about $42 million, roughly half of which was cash, according to a person familiar with the matter. Spacious had previously raised $13 million at a $29 million valuation from investors including August Capital, BoxGroup, Lerer Hippeau and MetaProp NYC, according to PitchBook.
Spacious is a much cheaper option than WeWork for finding a place to work, starting at a $20 day pass and $99 a month. The company doesn’t take on long-term leases like WeWork’s main business, and instead relies on striking agreements with owners and operators of retail locations who want to make extra money when the spaces aren’t used heavily during the day.
If WeWork can grow the business, it can start to make the case to investors that it has co-working options for more price-conscious customers. One potential problem for WeWork as it looks to grow Spacious, a business that hinges on putting office workers in restaurants, is zoning hurdles. Spacious yanked its San Francisco business this summer, citing a lack of regulatory approval as a factor.