Lord & Taylor Sells NYC Flagship Store for $850 Million
Lord & Taylor is selling its flagship New York City store for $850 million, a move that will convert most of the landmark building into office space and the headquarters of real estate startup WeWork Cos.
The transaction, part of an effort by Lord & Taylor parent Hudson’s Bay Co. to reduce its debt, is the most dramatic sign of how even grand stores are giving way to more profitable uses. As more shopping shifts online and fewer people visit stores, retailers from Macy’s Inc. to Sears Holdings Corp. are trying to sell or redevelop hundreds of locations; mall owners are increasingly turning anchor store spaces into grocery stores or gyms.
Lord & Taylor has operated its store on Manhattan’s Fifth Avenue since 1914. The limestone structure, in an Italian Renaissance style, was designed by the same architects who built the Saks Fifth Avenue flagship further uptown. Both are owned by Hudson’s Bay, a Canadian retailer that acquired the two U.S. chains in recent years.
Lord & Taylor will continue to operate a smaller store at the location, but most of the 12-floor building will become WeWork’s headquarters and other office space. The Lord & Taylor site was appraised at $655 million in 2016 when Hudson’s Bay refinanced the mortgage on the property.
For WeWork, which positions itself as real estate for the millennial generation, the deal gives it a visible position amid the changing winds of real estate. The seven-year-old company is one of the world’s richest startups, with a valuation of more than $20 billion. It generally takes on long-term leases for raw office space and builds out the interior with modern design and flexible spaces, which it subleases for terms of as short as a month.
winds of real estate. The seven-year-old company is one of the world’s richest startups, with a valuation of more than $20 billion. It generally takes on long-term leases for raw office space and builds out the interior with modern design and flexible spaces, which it subleases for terms of as short as a month.
Department stores have been struggling with falling sales as shoppers buy more online, shift their preferences to small specialty stores and spend more on travel and entertainment. Hudson’s Bay, which also owns a namesake Canadian chain and German department stores, isn’t immune. Losses at Hudson’s Bay’s nearly doubled to 422 million Canadian dollars (US$333 million) in the first six months of this fiscal year. Sales fell 0.9% to 6.49 billion Canadian dollars.