It’s been a busy news cycle for Hudson’s Bay Company (HBC). On the heels of its announcement that CEO Gerald L. Storch is stepping down to return to his advisory firm, HBC now reports that it’s selling the iconic Lord & Taylor flagship store on Fifth Avenue to WeWork for $850 million. The move will enhance HBC’s liquidity, reports interim CEO Richard Baker.
HBC says it will continue business as usual at the flagship through the holiday shopping season, after which WeWork will convert the building into a multi-use facility that will include its New York City headquarters and traditional WeWork space as well as a reimagined 150,000-square-foot Lord & Taylor store.
"This partnership places HBC at the forefront of dynamic trends reshaping the way current and future generations live, work and shop: the sharing economy and urban and suburban mixed-use real estate planning,” says Baker, who also serves as HBC's governor and executive chairman.
The partnership with WeWork spans other cities where HBC has a physical presence. WeWork will lease retail space inside additional HBC stores, including Queen Street in Toronto; Granville Street in Vancouver; and Galeria Kaufhof in Frankfurt.
“HBC and WeWork have been working together to reimagine retail environments for current and future generations,” Baker adds. “This is a transformative partnership that rethinks how retailers create exciting environments and leverage less productive space, while substantially improving the value proposition."
Both HBC and WeWork plan a reciprocal benefits program to improve their respective product offerings, which will give the rapidly growing global WeWork membership access to exclusive HBC sales online and in store, and offer HBC customers access to WeWork's We Membership platform.
“Our partnership with the WeWork team creates new opportunities for HBC to redefine the traditional department store by extending those communities and drive additional traffic to our stores, particularly as we add co-working and community space to existing, vibrant retail locations," Baker says.
In addition, HBC will migrate its corporate offices in New York, Toronto, Cologne, Dublin and Bengaluru to "Powered by We," an operating platform that lets WeWork combine physical spaces with digital systems to streamline the design, build-out and operation of office space.
"The trend of urbanization is something we must all recognize and understand. People from every walk of life are seeking spaces in big cities that allow for human connections,” says WeWork CEO Adam Neumann. “There is no reason why retail space should not be part of that movement. WeWork's role in this big trend will be to reimagine and reshape places so as to foster collaboration, innovation and creativity. Retail is changing and the role that real estate has to play in the way that we shop today must change with it.
"The opportunity to develop this partnership with HBC to explore this trend was too good to pass up," Neumann concludes.