The century-old, 676,000-square foot Lord & Taylor flagship store on Fifth Avenue will become office co-working behemoth WeWork's new headquarters. The department store's parent company, Hudson Bay, sold the building for $850 million.
According to the NY Times, the landmark "Italian Renaissance design[ed]" store, "complete with grand entrance arch and copper cornice," will officially be taken over by WeWork in 2019: "Lord & Taylor will rent the bottom floors, redesigning them into a smaller version of its department store." So the holiday windows will be safe!
Like other retailers, Hudson Bay has struggled with financial headwinds as more customers migrate to online shopping. They announced 2,000 layoffs earlier this year and are being pressured to continue to cut costs and sell off assets, like its Saks Fifth Avenue flagship on Fifth Avenue across from Rockefeller Center.
WeWork, whose value is about $20 billion, has been rapidly growing. It is currently headquartered in Chelsea, where it has been kicking out tenants to expand. The Times notes, "WeWork’s partner in its real estate joint venture, Rhône Capital, will also invest $500 million in Hudson’s Bay. (The joint venture, WeWork Property Advisors, will eventually take over some of that holding.) All told, that will give Hudson’s Bay more than $1 billion in fresh capital to pay down debt and bolster its cash holdings."
Last week, the Wall Street Journal headlined an article about WeWork's business model, "WeWork: A $20 Billion Startup Fueled by Silicon Valley Pixie Dust," with skeptics wondering why the company is valued so high. "If you had positioned this as a real-estate company, it wouldn’t be worth this," said Barry Sternlicht, who manages $50 billion of real estate with Starwood Capital Group LLC.
“We pay a lot of attention to not only managing our retail business but to creating value through creative transactions with our real estate,” said Hudson’s Bay’s Chairman and interim CEO Richard Baker, told the Wall Street Journal, adding that WeWork will also take space in a Hudson Bay store in Canada. He thinks that co-sharing the building will mean 6,000-8,000 more people will visit the stores each day.
