More than a century after 75,000 customers attended the 1914 grand opening of Lord & Taylor’s flagship department store on Fifth Avenue and West 39th Street in Manhattan, the retail giant will sell its iconic Italian Renaissance Revival building for $850 million to office space startup WeWork.
Lord & Taylor’s parent company, Hudson’s Bay Co. (HBC), made the announcement on Tuesday, detailing plans to continue the store’s operation through the 2018 holiday season, at which point it will undergo a renovation and ultimately occupy 150,000 square feet of the 676,000-square-foot building. The remaining space will house WeWork’s headquarters and WeWork office space.
“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 HBC interim CEO Richard Baker in a press release. “WeWork’s business goes beyond offering modern, shared office space to creators, leaders and self-starters, by building robust communities. 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.”
This decision comes at a critical moment for the retail industry as it struggles to compete with the online marketplace. In some cases, a company’s real estate holdings are proving more valuable than its retail offerings. According to HBC, the Fifth Avenue Lord & Taylor store has been “in comparison is many times less productive than the Saks Fifth Avenue flagship building.”
Lord & Taylor is considered one of the oldest retailers in New York, dating back to a dry goods store that owners Samuel Lord and George Washington Taylor opened in 1826 in Lower Manhattan. When architectural firm Starrett & Van Vleck designed the Fifth Avenue location, it was “the first ‘frankly commercial’ building” above 34th Street, and was quickly regarded for its chamfered corners, copper cornice, and limestone base. In 2007, the structure was landmarked by the Landmark Preservation Commission of New York.
Courtesy WeWork
WeWork Fulton Center Commons in New York City
“The opportunity to develop this partnership with HBC to explore this trend was too good to pass up,” said WeWork CEO and co-founder Adam Neumann in the release.” We are excited to work with HBC, a leader in retail, and for what comes next.”
HBC has also committed to renting some of its retail space in Toronto, Frankfurt, and Vancouver, British Columbia, to the shared workspace company as part of the deal.
