Lord & Taylor has wised up to the new economy and will welcome WeWork into its properties, including selling its Fifth Avenue flagship to the collaborative workspace company.
The retailer’s parent company, Hudson’s Bay Company, announced Tuesday a collaboration with WeWork and its real estate partner, Rhône Capital.
Under the deal, Lord & Taylor will sell its nearly 676,000-square-foot flagship to WeWork for $850 million after the 2018 holiday season. At that point, Lord & Taylor will limit its operations in the landmarked building to roughly 150,000 square feet.
The city opted to designate the 424 Fifth Ave. building a landmark in 2007, citing the Italian Renaissance Revival style of the structure, which was erected in 1913-14. At the time, the city also noted that the store had its roots in an 1826 establishment on Catherine Street and was one of the first prominent retailers to elect a female president in 1945.
Beyond New York, WeWork will lease space in other Hudson’s Bay Company department stores and Rhône will invest $500 million in the retailer, according to a joint announcement about the partnership.
Richard Baker, interim CEO and executive chairman of the Hudson’s Bay Company, noted in the announcement that the company expected “minimal impact” on its earnings from the flagship sale, which produced far less revenue than the Saks Fifth Avenue flagship building.
“This is a transformative partnership that rethinks how retailers create exciting environments and leverage less productive space, while substantially improving the value proposition,” Baker said in a statement. “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.”
WeWork intends to place its global headquarters in the 424 Fifth Ave. building, which its CEO and co-founder, Adam Neumann, described as a testament to the NYC-founded firm’s long-standing commitment to the city.
As a co-working company, WeWork leases relatively small work spaces to freelancers, start-ups and other individuals and firms for shorter periods of time than traditional commercial landlords.
“WeWork could not be what it is today if it wasn’t for our New York roots,” Neumann said in a statement. “We will continue to create jobs within this city while simultaneously re-energizing the retail experience.”