A New York based tech start up called WeWork is buying Lord & Taylor’s flagship store on Fifth Avenue where the bottom floors will be rented out and redesigned into a smaller version of the department store. The flagship will be sold for $850 million and WeWork will convert the 11 story building into their own headquarters while making a $500 million investment in Lord & Taylor’s parent, Hudson’s Bay Company.
Many retailers across the U.S. have been in thoughts about the uses of their physical store spaces as shopping shifts to the internet and shoppers prefer to spend less time in stores. Hudson’s Bay’s stock price has fallen by almost a third over the past year while retail sales were also down by 1% in the first half of the year. The retailer’s market capitalization is roughly $1.7 billion which is a tenth of WeWork’s private market valuation.
For years, Hudson’s Bay has faced a ton of pressure to sell their real estate holdings which include the Saks Fifth Avenue store at Fifth Avenue that is worth about $3.7 billion. The combined investment from WeWork will give the retailer more than $1 billion in capital to pay down debt and boost cash holdings.