Lord & Taylor Sells 5th Avenue Flagship to WeWork For $850M

HBC sells flagship New York location to WeWork for US$850M

The company's flagship Saks on Fifth Avenue store was recently appraised at $3.7 billion.

Hudson's Bay Co. has a $1-billion deal to sell its Lord & Taylor flagship store in NY to WeWork Cos and team up with the office-sharing business to run its operations in parts of HBC's stores. And will keep the whole building with its usual operations through next year's holiday season. To do so, they'll consolidate the footprint of their flagship department store on the building's bottom floors.

Adam Neumann, CEO and co-founder of WeWork, said: "WeWork could not be what it is today if it wasn't for our NY roots".

Neumann continued: "As a business with an emphasis on human connections in physical spaces, we will continue to create jobs within this city while simultaneously re-energising the traditional retail experience".

The leasing arrangement with WeWork will begin with space in the Hudson's Bay store on Queen Street in Toronto, the Hudson's Bay store in downtown Vancouver and a Galeria Kaufhof in Frankfurt.

Both HBC Executive Chairman Richard Baker and Litt have made their mark as real estate investors, but now hold divergent views on the future of North America's oldest company, at a time when brick-and-mortar retailers are being challenged by nimble online operators.

A 191-year-old shopping giant and a seven-year-old shared workspace company may seem like odd bedfellows, but the deal is a reflection of luxury retail's recent struggles. The move is expected to take place after Christmas next year.

Lord & Taylor has been able to avoid some of these pitfalls, thanks largely to its position under the Hudson's Bay umbrella.

The deal, which has already received approval from a majority of HBC shareholders, comes as HBC faces pressure from activist Land & Buildings to unlock the value of its substantial real estate holdings.

All of this made the partnership much more appealing for Hudson's Bay.

The company's flagship building has been a presence on Fifth Avenue for more than a century; the 11-story limestone structure opened in 1914, and was named a New York City landmark in 2007.

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