The Hudson’s Bay Company (HBC) is selling its Lord & Taylor’s New York City flagship store to WeWork in a deal worth $850 million US ($1.075 billion CA).
Office-sharing company WeWork also plans to move into some of HBC’s retail properties in Canada as part of the deal. WeWork office spaces will take up floors in Bay department stores on Queen Street in Toronto, Granville Street in Vancouver and Galeria Kaufhof in Frankfurt.
The Lord & Taylor flagship store is going to continue operations through the 2018 holiday season next year, after which the 150,000 sq ft space will be converted into WeWork’s NY headquarters.
“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. There is no reason why retail space should not be part of that movement,” said Adam Neumann, CEO and Co-Founder of WeWork, in a statement. “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.”
For HBC, the transaction is expected to pay down $1.6 billion CA in debt.
Both companies say they intend to implement a reciprocal benefits program to enhance their respective product offerings. According to a media release, the program is expected to allow the global membership of WeWork to participate in exclusive HBC sales online and in store, and HBC customers to have access to WeWork’s We Membership platform.
“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,” said Richard Baker, HBC’s Governor, Executive Chairman and interim CEO. “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.”
WeWork is expected to deliver a deposit of $95 million CA by closing, in November 2017.